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2018 (9) TMI 556 - AT - Central ExciseCENVAT Credit - amount of discounts given to the appellant - Rule 3 of Cenvat Credit Rules, 2004 - Held that - In terms of Rule 3 of Cenvat Credit Rules, 2004 an assessee entitled to avail Cenvat credit of duty paid. From the facts of the case, it is not coming out that the appellant has got discount on the duty part, therefore, in terms of Rule 3 of Cenvat Credit Rules, 2004, whatever duty has been paid by them, they are entitled to avail Cenvat credit. Credit allowed - appeal allowed - decided in favor of appellant.
Issues: Denial of Cenvat credit due to discounts received on inputs
Analysis: The appellant appealed against an order denying Cenvat credit on inputs due to discounts received. The appellant procured inputs, paid duty on them, and claimed Cenvat credit. Subsequently, the supplier provided discounts on the inputs. The appellant was accused during an audit of not being eligible to avail Cenvat credit on the discounted amount. The appellant contended that since it was not alleged that the discounts were on the duty part, the credit cannot be denied. The appellant also referenced a CBEC circular stating that the supplier must not have claimed a refund on the excess duty paid for the appellant to avail credit. The Tribunal examined Rule 3 of the Cenvat Credit Rules, 2004, which allows an assessee to claim Cenvat credit on duty paid. It was noted that there was no evidence that the discounts received were on the duty part. Therefore, the appellant was entitled to avail Cenvat credit for the duty paid. The Revenue heavily relied on a CBEC circular, arguing that the appellant should ensure the supplier did not claim a refund. However, the Tribunal clarified that the Revenue must verify with the supplier regarding any excess duty refund before denying credit to the appellant. The Tribunal concluded that the appellant rightfully claimed the Cenvat credit, and the impugned order was unsustainable, thus setting it aside. In conclusion, the appeal was allowed, and any consequential relief was granted. The judgment emphasized the importance of verifying refund claims with suppliers before denying Cenvat credit to the recipient.
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