2014 (11) TMI 238 - AT - Central Excise

Denial of CENVAT Credit - supplier of the goods is not a manufacturer - Held that - Goods supplied by M/s Amul Industries Pvt. Ltd. is an excisable product and the appellant procured the goods on payment of excise duty. Once the supplier of the goods had discharged the duty liability, the recipient can take CENVAT Credit of the duty paid and use the same in further manufacture of dutiable final product. Accordingly, I set aside the impugned order - Following decision of Cipla Ltd. 2011 (7) TMI 253 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues:
1. Denial of CENVAT Credit by lower appellate authority based on supplier not being a manufacturer.
2. Jurisdiction of authority-in-charge to dispute supplier's duty payment.
3. Applicability of previous Tribunal decisions on CENVAT Credit denial.

Analysis:
1. The appeal challenged the denial of CENVAT Credit of Rs. 13,95,414/- by the lower appellate authority due to the supplier, M/s Amul Industries Pvt. Ltd., not being recognized as a manufacturer. The authority ordered recovery of the amount with interest, considering the duty paid by the supplier as a deposit, not actual duty.

2. The appellant argued that they procured goods from M/s Amul Industries Pvt. Ltd. after paying duty, enabling them to claim credit for further manufacturing. The appellant contended that the authority-in-charge of the recipient has no jurisdiction to question the supplier's duty payment status, especially when there is no conclusive decision on whether M/s Amul Industries Pvt. Ltd. is a manufacturer.

3. Citing precedents like Hylite Cables, Synmedic Laboratories, Hindustan Lever Ltd., Indian Oil Corporation Ltd., and Cipla Ltd., the appellant emphasized that once goods are received with duty paid, CENVAT Credit cannot be denied based on the supplier's duty obligation. The Tribunal decisions highlighted the recipient's right to claim credit when duty has been discharged by the supplier, supporting the appellant's argument for allowing the appeal.

4. The Revenue, represented by the Jt. Commissioner (AR), reiterated the lower authorities' findings, opposing the appellant's plea for CENVAT Credit based on the supplier's duty payment status.

5. After evaluating both sides' submissions, the judge, P R Chandrasekharan, acknowledged that the goods supplied were excisable, and the appellant paid excise duty for procurement. Referring to the precedents relied upon by the appellant, the judge concurred that once the supplier fulfills duty liability, the recipient is entitled to claim CENVAT Credit for further manufacturing. Consequently, the judge set aside the lower authority's decision, allowing the appeal and granting any consequential relief deemed necessary.