2016 (12) TMI 779 - AT - Central Excise

CENVAT credit - whether it is justified in holding that C.B.E.C. issued a Circular No. 877/15/2008 dated 17-11-2008 wherein it has been clarified that when the credit or debit notes are issued duty paid on inputs does not change therefore, it will not affect the admissible Cenvat credit? - Held that - I find that the issue is already settled through the case of Dixon Technologies (India) Pvt. Ltd. and Others Versus C.C.E., Noida 2016 (11) TMI 1214 - CESTAT ALLAHABAD , where it was held that any circular issued by C.B.E.C. is a clarification on the existing provisions of Rules and therefore it is applicable for the entire period for which such Rules and para materia Rules existed on statute - It is very clear from the above circular that when subsequently the supplier allows some trade discount or reduces the price, without reducing the duty paid by him, the duty paid is admissible as Cenvat Credit. It is undisputed that the duty paid by the input manufacturers remained unaltered in the present case even after issue of credit notes. Therefore, I allow the appeal and set aside the impugned Order-in-Original & Order-in-Appeal and hold that the appellant shall be entitled for consequential benefits, if any, in accordance with law - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Disallowance of Cenvat credit due to reduced prices of inputs.
2. Interpretation of Cenvat Credit Rules regarding variation in credit.
3. Applicability of Circular No. 877/15/2008 and previous Tribunal orders.
4. Comparison of facts with a previous Final Order.
5. Decision on appeal challenging Order-in-Appeal disallowing Cenvat credit.

Analysis:
1. The case involved the disallowance of Cenvat credit by the Revenue due to reduced prices of Colour Picture Tubes (CPT) received by the appellant from suppliers. The Revenue proposed to recover Cenvat credit amounting to ? 46,91,242 and impose a penalty based on the issue of debit notes reducing the prices of CPTs.

2. The appellant contended that there is no provision in the Cenvat Credit Rules to vary the credit even if the supplier paid more duty. The appellant argued that the duty paid on inputs by the supplier can be availed as credit as long as no refund of Excise duty claimed by the supplier on the account of price reduction. The Original Authority disallowed the Cenvat credit and imposed a penalty, which was upheld in the Order-in-Appeal.

3. The appellant relied on Circular No. 877/15/2008 issued by the Central Board of Excise and Customs (C.B.E.C.) to support their argument that duty paid on inputs does not change when credit or debit notes are issued. The appellant also cited a previous Tribunal order which held that Cenvat credit need not be recovered when the assessable value of inputs changes due to debit or credit notes.

4. The Departmental Representative (D.R.) agreed that the facts of the case were similar to those in the previous Tribunal order dated 16-08-2016. The Tribunal had passed a Final Order in that case, which was considered relevant to the present appeal.

5. After considering the submissions of both parties, the Tribunal found that the issue was already settled in the previous Final Order dated 16-08-2016. The Tribunal held that the appellant was entitled to the Cenvat credit of duty paid on inputs and allowed the appeal, setting aside the impugned Order-in-Original and Order-in-Appeal. The appellant was granted consequential benefits in accordance with the law.