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2025 (4) TMI 759 - AT - Central ExciseCENVAT credit - process amounting to manufacture or not - credit taken under the invoices does not meet the requirement of Rule 9 of the Cenvat Credit Rules 2004 - HELD THAT - As per the findings at Para 6.5 of the Order-in-Appeal there was no reason for the Commissioner(Appeals) to dismiss the Appeal filed by the Appellant. However at Para 6.6 of the impugned Order-in-Appeal he has gone beyond the scope of the Show Cause Notice and dismissed the Appeal on the sole ground that the Appellant has not produced any evidence towards payment for the purchase of the goods which was not the issue in the Show Cause Notice. On this ground itself the impugned order requires to be set aside. The Tribunal has consistently held that the duty paid at the end of the vendor cannot be questioned at the end of the user of the goods - In the case of AGP Food Products 2014 (2) TMI 1096 - CESTAT NEW DELHI the Tribunal has held that as the supplier of input is not party to the present proceeding and the assessment cannot be reopened at the recipient end. The impugned order is not sustainable and is set aside. Conclusion - i) The scope of SCN is surpassed. ii) The duty paid at the end of the vendor cannot be questioned at the end of the user of the goods. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Validity of Cenvat Credit - Relevant legal framework and precedents: The Cenvat Credit Rules, 2004, particularly Rule 9, govern the admissibility of Cenvat credit. Rule 9(5) places the burden of proof regarding the admissibility of the credit on the manufacturer or provider of output service taking such credit. The case of AGP Food Products v. CCE, Delhi-II and C.C.E., Delhi-III v. Neel Metal Products Ltd. are relevant precedents. - Court's interpretation and reasoning: The Tribunal noted that the Appellant had fulfilled the essential requirements for taking Cenvat credit, including proper accounting and utilization of the credit for payment of duty on finished goods. The Tribunal emphasized that the duty paid by the vendor should not be questioned at the receiver's end. - Key evidence and findings: The Appellant had procured Fuel Oil under duty-paying documents, made necessary entries in their registers, and utilized the credit for their final products. The Tribunal found no suppression of facts by the Appellant. - Application of law to facts: The Tribunal applied the precedent that credit cannot be denied on the ground that the supplier's activity did not constitute manufacture, as the assessment cannot be reopened at the recipient's end. - Treatment of competing arguments: The Tribunal dismissed the Department's argument that the credit should be denied due to the supplier's non-manufacturing activity, referencing consistent Tribunal holdings and the cited case law. - Conclusions: The Tribunal concluded that the Appellant was entitled to the Cenvat credit and set aside the impugned order. Dismissal of Appeal by Commissioner(Appeals) - Relevant legal framework and precedents: The scope of the Show Cause Notice and the requirement for evidence submission were central to this issue. - Court's interpretation and reasoning: The Tribunal found that the Commissioner(Appeals) had erred by dismissing the Appeal based on a ground not raised in the Show Cause Notice, specifically the lack of evidence for payment of goods. - Key evidence and findings: The Tribunal noted that the Appellant had not been required to produce such evidence initially, and the Commissioner(Appeals) had gone beyond the scope of the original notice. - Application of law to facts: The Tribunal applied the principle that the grounds for dismissal must align with the issues raised in the Show Cause Notice. - Treatment of competing arguments: The Tribunal rejected the Department's justification for the dismissal, emphasizing procedural fairness and adherence to the scope of the notice. - Conclusions: The Tribunal set aside the dismissal by the Commissioner(Appeals) and allowed the Appeal. 3. SIGNIFICANT HOLDINGS - The Tribunal held that "the duty paid at the end of the vendor cannot be questioned at the end of the user of the goods," reinforcing the principle that the assessment of the supplier's activities should not impact the recipient's credit entitlement. - The Tribunal established that procedural fairness requires that grounds for dismissal must be consistent with the issues raised in the original Show Cause Notice. - The final determination was to set aside the impugned order and allow the Appeal, granting consequential relief to the Appellant as per law.
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