2015 (12) TMI 1399 - AT - Central Excise

Denial of CENVAT Credit - whether the appellant who has procured ethyl alcohol from M/s Andhra Sugars, on payment of duty of excise can be disallowed the credit of the said duty on the ground that the supplier of the inputs should not have paid the duty - Held that - Revenue has not raised any objection at the time of payment of duty by M/s Andhra Sugars. It stands held in number of decisions that the recipient of the goods/inputs cannot be denied the CENVAT Credit of duty paid by the supplier of the inputs on the ground that the supplier should not have paid such duty. One such reference can be made to a latest decision of the Tribunal in the case of Cummins Diesel Sales Service India Ltd Vs CCE Pune 2014 (11) TMI 238 - CESTAT MUMBAI . Reference can also be made to the majority decision of the Tribunal in the case of Asian Colour Coated Ispat Ltd. Vs CCE Delhi 2014 (9) TMI 974 - CESTAT NEW DELHI where originally there was difference of opinion between two Members and as per the majority decision it was held that CENVAT Credit cannot be denied to an assessee on the ground that manufacturer of final product was not required to pay duty by utilising the credit, as the activity at his end did not amount to manufacture. - there is no dispute that M/s Andhra Sugars cleared the inputs on payment of duty. As the issue is settled, I find no merits in the said stand of the Revenue - Decided in favour of assessee.

Summary

Issues:
- Whether the appellant can be denied CENVAT credit for duty paid on ethyl alcohol procured from a supplier who paid excise duty on the product.

Analysis:
1. The appellant, engaged in manufacturing bulk drugs, procured ethyl alcohol from a supplier who paid duty on the product. The appellant availed CENVAT credit on the duty paid by the supplier.

2. The Revenue objected, arguing that ethyl alcohol was not an excisable product, and thus, the duty paid by the supplier should not have been levied. Consequently, the Revenue denied CENVAT credit to the appellants after initiating proceedings through show-cause notices.

3. The main issue was whether the appellant, who procured ethyl alcohol with duty paid by the supplier, could be denied the credit on the ground that the supplier should not have paid the duty. The Tribunal referred to various precedent decisions to support the appellant's entitlement to the credit, including the Cummins Diesel Sales & Service India Ltd case and the Asian Colour Coated Ispat Ltd case.

4. The Tribunal emphasized that the recipient of goods/inputs cannot be denied CENVAT credit based on the supplier's duty payment decisions. The Tribunal noted that since M/s Andhra Sugars had cleared the inputs by paying duty, the Revenue's objection was unfounded. The Tribunal found no merit in the Revenue's stance and set aside the impugned orders, allowing all three appeals with consequential relief to the appellants.