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2022 (11) TMI 792 - AT - Central ExciseCENVAT Credit - purchase against advance authorization - exemption under para 4.1 of FTP 2009-14 or not - supplier has discharged the duty duly - duty payment on the part of the supplier can be disputed at the end of the recipient of the input, or not? - HELD THAT - There is no dispute on the fact that the supplier M/s. Reliance Industries Ltd. has discharged the duty as per law. The inputs were received by the appellant for use in the manufacture of final product therefore, the sufficient compliance of the provision of Cenvat Credit Rules, 2004 stood made. It is settled law that at the end of the service recipient of input, cenvat credit cannot be disputed on the ground that whether the said input is liable to duty or otherwise at the end of the supplier. Once the supplier has paid the duty whether it is payable or otherwise, the said duty is clearly admissible as cenvat credit. The assessment of duty payment on the part of the supplier cannot be disputed at the end of the recipient of the input therefore, there is no reason to deny the cenvat credit once the duty paid inputs were received by the appellant - reliance can be placed in the case of COMMR. OF C. EX. S.T., JAIPUR-I VERSUS DCM SHRIRAM CONSOLIDATED PVT. LTD. 2017 (8) TMI 886 - CESTAT NEW DELHI . In the present case duty was paid by M/s. Reliance Industries Ltd. against invalidation of advance authorisation, the cenvat credit to the appellant is admissible - Demand not sustainable - penalty set aside - appeal allowed.
Issues:
- Whether the appellant is entitled to cenvat credit for duty paid by the supplier against invalidation of advance authorization under various advance licenses? - Whether the duty paid by the supplier is admissible as cenvat credit to the appellant even if it was not payable by the supplier? - Whether the appellant is entitled to cenvat credit based on relevant legal provisions and precedents? Analysis: 1. The appellant, engaged in manufacturing Pet preforms, purchased inputs with central excise duty paid by the supplier against invalidation of advance authorization under advance licenses. The department contended that such purchases were exempted under FTP 2009-14, hence the appellant was not entitled to cenvat credit. The adjudicating authority demanded the cenvat credit amount, leading to the present appeals. 2. The appellant's counsel argued that duty paid on inputs entitles the recipient to cenvat credit, even if not payable by the supplier. Citing relevant judgments like SHRIRAM CONSOLIDATED PVT. LTD., MDS SWITCHGEAR LTD., and NAHAR GRANITES LTD., the counsel emphasized the recipient's right to cenvat credit on duty-paid inputs. 3. The Tribunal, after considering submissions, noted that the supplier had duly paid the duty on inputs received by the appellant for manufacturing final products. It was established that compliance with Cenvat Credit Rules, 2004 was met, and the duty payment by the supplier entitled the appellant to cenvat credit, as per legal precedents. 4. Referring to the case of DCM SHRIRAM CONSOLIDATED PVT. LTD., the Tribunal affirmed that duty paid on inputs procured against invalidated advance licenses was admissible as cenvat credit. The judgment emphasized that the duty payment by the supplier was conclusive for the recipient's eligibility for cenvat credit. 5. The Gujarat High Court's decision in NAHAR GRANITES LTD. reiterated the entitlement of manufacturers to cenvat credit for duty-paid inputs, even if the duty was not legally payable. The Court emphasized that when the department accepted duty payments without dispute, the recipient's right to cenvat credit remained intact. 6. In light of the legal provisions and precedents, the Tribunal concluded that the duty paid by the supplier against invalidation of advance authorization entitled the appellant to cenvat credit. The impugned order demanding cenvat credit was set aside, and the penalty on the appellant was also revoked due to the unsustainable demand. 7. The judgment highlighted that once duty is paid by the supplier, the recipient's right to cenvat credit is established, irrespective of the duty's legal nature. The decision aligned with established legal principles and upheld the appellant's entitlement to cenvat credit based on duty-paid inputs.
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