2023 (10) TMI 956 - AT - Central Excise

CENVAT Credit - Denial of credit on the ground that supplier has paid Duty on exempt product - Gravure Printing Cylinders received by the appellant - Printing Blocks and Printing Types covered in the ambit (exempt) the Printing Cylinders or not - HELD THAT - It prima facie appears that Printing Cylinders received by the appellant duly duty paid is not exempted. Therefore, the entire basis of the department fails. However, without going into this issue in detail, the appeal can otherwise be disposed of only on the ground that the assessment of the duty payment at the supplier s end has not been questioned or challenged by the jurisdictional departmental officer of the suppliers. As there is no evidence available on record that the payment of duty by the supplier was questioned/ challenged / disputed by their jurisdictional officer, in such case, the payment of duty is found to be legal and correct and consequently, the appellant s cenvat credit cannot be denied. This issue has been considered time and again. In the case of COMMISSIONER OF CENTRAL EX. CUS., SURAT-III VERSUS CREATIVE ENTERPRISES 2008 (7) TMI 311 - GUJARAT HIGH COURT , the Hon ble Gujarat High Court in the facts that whether the activity of the manufacturer amounts to manufacture or otherwise to arrive at a conclusion that whether the goods are dutiable and it was held that The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture. Thus, it is settled that even if Excise duty is not payable on the product for any reason but the assessee paid the excise duty and said payment of duty is not challenged or questioned at the manufacturers end, no question can be raised as regard availment of the credit by the recipient of the goods. Accordingly, in the present case also, being the similar fact involved, the cenvat credit cannot be denied merely on the ground that the supplier was not required to pay the duty. Appeal allowed.

Summary

Issues Involved:
1. Denial of Cenvat Credit on Gravure Printing Cylinders.
2. Legality of duty payment by the supplier and its acceptance for Cenvat credit by the appellant.

Summary:

Issue 1: Denial of Cenvat Credit on Gravure Printing Cylinders
The adjudicating authority denied Cenvat credit on Gravure Printing Cylinders received by the appellant, asserting that these cylinders were not liable to duty. Consequently, the supplier's payment of duty was deemed incorrect, and thus, the Cenvat credit on such duty was not available to the appellant.

Issue 2: Legality of Duty Payment by the Supplier and Its Acceptance for Cenvat Credit by the Appellant
The appellant contended that Gravure Printing Cylinders were not exempted under any notification and thus, the supplier rightly paid excise duty. Even if it was assumed that the supplier was not required to pay the excise duty, the duty paid by the supplier, which was not challenged by the jurisdictional officer, stands good as per the law. The appellant cited several judgments supporting their claim that once the duty payment by the supplier is accepted, the Cenvat credit cannot be denied to the recipient.

Tribunal's Findings:
The Tribunal noted that the Printing Cylinders received by the appellant were duty paid and not exempted. Therefore, the department's basis for denial of credit fails. Moreover, as the duty payment at the supplier's end was not questioned or challenged by the jurisdictional officer, the payment of duty is deemed legal and correct, making the appellant's Cenvat credit admissible. The Tribunal referred to several judgments, including those from the Supreme Court and various High Courts, which consistently held that if the duty payment by the supplier is not disputed, the recipient is entitled to avail Cenvat credit.

Conclusion:
The Tribunal concluded that the appellant is entitled to Cenvat credit on the duty paid for Gravure Printing Cylinders. The appeal was allowed, and the denial of Cenvat credit by the adjudicating authority was set aside. The Tribunal emphasized that unless the duty payment by the supplier is challenged, the recipient's Cenvat credit cannot be denied.