2023 (12) TMI 367 - AT - Central Excise

Recovery of CENVAT Credit - credit passed on by the appellant as the first stage dealer/importer by debiting DEPB pass book - Rule 12 of Cenvat Credit Rules, 2002/ Rule 14 of Cenvat Credit Rules, 2004 - HELD THAT - From a plain reading of the above provisions, it is clear that the Cenvat Credit has been taken and utilized wrongly, could be recovered from the manufacturer only. In the present case, the show cause notice has been erroneously issued to the appellant-dealer for passing on the credit by debiting the DEPB passbook instead of to the manufacturer , who received the credit. It is found that the purchasers, who have received the invoices, categorically denied availment/utilization of Cenvat Credit during the relevant period even though it was passed on to them in dealer s invoice. Necessary evidences have been annexed to the Appeal paper-book. No contrary evidence has been placed by the Revenue to rebut the same. Thus, recovery of credit from the first stage dealer/importer-appellant as confirmed in the impugned order, cannot be sustained. The impugned order is set aside - Appeal allowed.

Summary

Issues involved: Appeal against Order-in-Appeal, Recovery of additional customs duty, Admissibility of credit passed on, Recovery from first stage dealer/importer, Applicability of Cenvat Credit Rules.

Recovery of additional customs duty: The appellant, a dealer of excisable goods, had passed additional customs duty by adjusting in DEPB pass books during the relevant period of 2003-04. A show cause notice was issued for recovery of the credit under Rule 12 of Cenvat Credit Rules, 2002/ Rule 14 of Cenvat Credit Rules, 2004. The demand was confirmed with interest and penalty by the adjudicating authority, which was upheld by the Commissioner (Appeals). The appellant contended that the credit was passed on based on a bonafide belief and that the recovery from them, as first stage dealer/importer, was contrary to law as the provisions are applicable for recovery only from manufacturers. The appellant argued that the customers did not avail or utilize the credit, thus there was no revenue loss. The Tribunal found that recovery from the appellant was not sustainable as the credit was erroneously issued to them instead of the manufacturer, and the purchasers had denied availing/utilizing the credit during the relevant period.

Applicability of Cenvat Credit Rules: The appellant argued that the Cenvat Credit cannot be recovered from registered dealers as there is no provision under the Cenvat Credit Rules authorizing recovery from first stage dealer/importer. The Tribunal examined Rule 12 of Cenvat Credit Rules, 2002/ Rule 14 of Cenvat Credit Rules, 2004, which clearly states that the credit taken and utilized wrongly could be recovered from the manufacturer only. As the recovery notice was issued to the appellant-dealer for passing on the credit by debiting the DEPB passbook instead of to the manufacturer, the Tribunal held that the recovery from the first stage dealer/importer was not sustainable. The impugned order was set aside, and the appeal was allowed with consequential relief as per law.