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2023 (12) TMI 249 - AT - Central ExciseAvailment of credit to the extent of loss in transit , ascertained from measurement at the factory - rule 3 of CENVAT Credit Rules, 2004 - lower authorities had adopted the benchmark of 2% as the tolerance and further denied credit wherever the difference was more than 0.4% as established by issue of debit notes - HELD THAT - It would appear that payment of duty by the supplier on clearance of the goods, as well as inclusion thereof in invoices raised on appellant, is not in dispute and objection is solely on the ground that, in terms of rule 2(k) of CENVAT Credit Rules, 2004, only such duty paid goods as have been used in the manufacture of excisable goods are entitled to be availed as credit. The issue is no longer res integra and that, in SAVITA OIL TECHNOLOGIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE BELAPUR, NAVI MUMBAI 2022 (6) TMI 1175 - CESTAT MUMBAI , it was held that Availment of CENVAT credit of duties paid on inputs is enabled by rule 3 of CENVAT Credit Rules, 2004. The credit taken by the appellant is the duty of central excise paid by the supplier as recorded in the invoices and any difference in quantity, manifested in goods receipt note (GRN) on actual weighment at place of receipt, does not alter the tax thus borne on the goods except when credit accrues to the supplier through appropriate debit notes raised by recipient. No such document is placed on record. There is no evidence of any of inputs having been returned to supplier or rerouted elsewhere. Credit allowed - nothing remains in the impugned order which is set aside - appeal allowed.
Issues involved:
The issue in this appeal is the stand of the central excise authorities regarding the availment of credit for 'loss in transit' of volatile inputs, despite duty liability being discharged. The appeal challenges the recovery of Rs. 40,22,712 for the period from October 2010 to September 2011 based on the denial of credit beyond a certain tolerance limit. Issue 1: Stand of Central Excise Authorities The central issue revolves around the interpretation of rule 3 of CENVAT Credit Rules, 2004, concerning the availment of credit for 'loss in transit' of inputs like 'base oil' and 'other petroleum oils'. The lower authorities applied a tolerance benchmark of 2% and denied credit where the difference exceeded 0.4%, leading to the recovery amount being upheld in the impugned order. Issue 2: Interpretation of CENVAT Credit Rules The crux of the matter lies in whether only 'duty paid' goods used in manufacturing excisable goods are eligible for credit as per rule 2(k) of CENVAT Credit Rules, 2004. The appellant contends that the duty paid by the supplier on clearance of goods, included in invoices, should entitle them to credit, as supported by precedents and tribunal orders in similar cases. Judgment Summary: The Tribunal analyzed the precedent set by previous cases involving the appellant and concluded that the issue at hand had already been settled. The Tribunal referenced the settled principle that the credit taken by the appellant is based on the duty paid by the supplier as recorded in the invoices, and any discrepancy in quantity does not alter the tax liability unless re-credited by the manufacturer. The Tribunal emphasized that rule 3 of CENVAT Credit Rules, 2004 does not allow for arbitrary adjustments or tolerance limits, highlighting the need for identical duty discharge on procured inputs. The Tribunal further noted that compensatory restitution received from insurance claims should be adjusted by duty payment, a fact uncontested by the Revenue. The decision in Petronet LNG Ltd was cited to clarify that loss in transit should not be included in the assessable value, as it would lead to a higher tax liability. Based on these considerations and the lack of legal authority in the impugned order, the Tribunal set aside the order and allowed the appeal.
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