2014 (3) TMI 915 - AT - Central Excise

Denial of CENVAT Credit - Clearance of goods by 100% EOU - Credit to receiver of goods - Revenue contended that Cenvat credit of Customs duty paid is not available to the receiver of the goods, the availment of credit by appellants is against the provisions of the law. - Held that - In terms of provission of Section 3 of Central Excise Act, 1944, a 100% EOU, when clearing the goods in DTA is required to clear the same on payment of Excise duty. The measure of such duty shall be equal to the amount of Customs duty which would be leviable under Customs Act, 1962 or in any other law for the time being imposed on like goods produced or manufactured, outside India if imported into India. As such what is required to be paid by a 100% EOU is Central Excise duty and not Customs duty - invoices show payment of Central Excise duty and Education Cess on Excise duty. As such admittedly the supplier of the goods has paid Central Excise duty. If the duty paid by the supplier is the Central Excise duty, the appellants is admittedly entitled to the benefit of Cenvat credit of the same - Decided in favour of assessee.

Summary

Issues: Dispute over Cenvat credit for Excise duty paid on goods procured from a 100% EOU.

In this judgment, the issue revolved around the appellants procuring two DG sets from a 100% EOU, M/s. Sudhir Gensets, and claiming Cenvat credit for the Excise duty paid on the goods. The Revenue contended that as a 100% EOU, M/s. Sudhir Gensets should have cleared the goods by paying basic Customs duty, not Excise duty. The dispute centered on whether the appellants were entitled to the Cenvat credit for the Excise duty paid by the supplier.

The analysis of the judgment delves into the interpretation of relevant provisions, specifically Section 3 of the Central Excise Act, 1944. It was highlighted that a 100% EOU, when clearing goods in the DTA, is required to pay Central Excise duty, not Customs duty. Reference was made to a Supreme Court decision to support this interpretation. The judgment emphasized that the duty to be paid by a 100% EOU for clearance in the domestic tariff area is Excise duty, not Customs duty, aligning with the legal position established in precedent.

Furthermore, the judgment scrutinized the invoices provided by M/s. Sudhir Gensets, which indicated payment of Central Excise duty and Education Cess on Excise duty. It was concluded that since the supplier had paid Central Excise duty, the appellants were entitled to the Cenvat credit for the same. The principle that the assessment made at the supplier's end cannot be challenged at the input receiver's end was reiterated, emphasizing that any grievance regarding the duty payment should be addressed at the supplier's end, not the receiver's.

Additionally, the judgment addressed the issue of time bar, noting that the period in question was October 2006, with a show-cause notice issued in November 2007. It was observed that the credit availed by the appellants was transparently reflected in their account, indicating no suppression or intent to evade duty. Consequently, the demand was considered time-barred, and the appeal was allowed both on merits and limitation, affirming the appellants' entitlement to the Cenvat credit for the Excise duty paid by M/s. Sudhir Gensets.