2015 (10) TMI 769 - AT - Central Excise

Cenvat credit - eligible credit - supplier paid the amount on exempted goods as reversal of credit and shown the same on Invoice as duty of excise - Invocation of extended period of limitation - Held that - Input supplier paid the amount under Rule 6(3) of the said Rules, but, they have shown in the invoices as Central Excise duty. According to the learned Advocate, the input supplier shown amount in the invoices as Central Excise duty, therefore, it can not be treated an amount under Rule 6(3). Learned Advocate also contested the demand of the said amount as barred by limitation. I am unable to accept the contention of the learned Advocate on merit as well as on limitation. The mere mentioning of Central Excise duty wrongly in the invoice by the input supplier, appellant is not entitled to take CENVAT credit. - input supplier paid amount of ₹ 14,04,483/- as Central Excise duty, as evident from the invoices. But, in the case of ₹ 5,64,435/-, it was found that the input supplier have not paid Central Excise duty and wrongly declared the Central Excise duty in their invoices. This fact, is coming out from the verification report of the jurisdictional Assistant Commissioner, as mentioned in the impugned order. Thus, it is clear hit by Rule 3 of Cenvat Credit Rules, 2004. Regarding the demand is barred by limitation, it is seen that the appellant was earlier engaged in the manufacture of parts of syringes and were clearing the same without payment of duty and the amount 10% paid by the appellant on the value of exempted goods as per Rule 6(3) of the said Rules. - appellant knowing fully well had taken the credit, which they were not eligible to avail in the cenvat account. So, extended period of limitation would apply. - Decided against assessee.

Summary

Issues:
1. Availing CENVAT credit on parts and accessories with nil rate of duty.
2. Denial of CENVAT credit on exempted goods under Rule 6(3) of Cenvat Credit Rules, 2004.

Issue 1: The appellants were engaged in manufacturing Syringe classifiable under a specific sub-heading of the Central Excise Tariff Act, 1985. They availed CENVAT credit on parts and accessories of Syringe, which had a nil rate of duty under a particular notification. A show cause notice was issued alleging that the supplier of parts and accessories erroneously paid duty at a different rate, making the appellant ineligible for CENVAT credit. The adjudicating authority confirmed the demand of duty along with interest and imposed a penalty. The appellant argued that the input supplier paid duty as per invoices, citing relevant legal decisions supporting their compliance with Rule 3 of the Cenvat Credit Rules, 2004. The tribunal found that the input supplier paid Central Excise duty, not exempted duty, making the appellant eligible for CENVAT credit.

Issue 2: The denial of CENVAT credit on exempted goods amounting to a specific sum was contested by the appellant, claiming the invoices showed Central Excise duty and thus were covered under Rule 3 of the Cenvat Credit Rules, 2004. The Revenue argued that the appellant was aware of the exempted status of the goods and the amount paid was not Central Excise duty but under Rule 6(3) of the Rules. The tribunal noted discrepancies in the invoices and the actual nature of the payments made by the input supplier. It held that the appellant had taken irregular credit knowingly and upheld the denial of CENVAT credit on exempted goods. The extended period of limitation was applied in this case.

In conclusion, the tribunal set aside the demand for CENVAT credit on parts and accessories with nil rate of duty, while upholding the denial of CENVAT credit on exempted goods under Rule 6(3) of the Cenvat Credit Rules, 2004. The appeal was disposed of accordingly.