Admissibility of Cenvat credit of excess/wrongly paid duty

PJ/Case Laws/2011-12/1395

Case: V.G. STEEL INDUSTRY versus COMMISSIONER OF CENTRAL EXCISE

Citation: 2011 (271) E.L.T. 508 (P & H)

Issue: - Cenvat credit on inputs on which duty was paid wrongly or by mistake by the supplier – whether available to the buyer/manufacturer?

Brief Facts:- Appellant-assessee had claimed cenvat credit to the extent of duty paid on purchase of inputs. The credit was disallowed on the ground that duty paid on purchase of inputs was in excess of duty due and the benefit could be admissible only to the extent of duty due.

The Commissioner (Appeals) as well as the Tribunal confirmed order of the Adjudicating Authority. The Tribunal observed that the law provides that manufacturer can avail Modvat credit only to the extent of duty paid on inputs purchased. If the supplier of inputs was not subjected to duty payment, then the appellant cannot be avail modvat in respect of such inputs.

The Tribunal further noted that if the supplier has by mistake paid the duty, which would only entitle the supplier to seek refund of such amount. But that by itself cannot create any right in favour of the appellant who had procured such duty free inputs.

Hence, appellant has filed appeal before the High Court raising the following substantial questions of law:

- Whether the appellant is entitled to cenvat credit on the basis of supplementary invoice when payment of duty is not disputed?

- Whether benefit of cenvat credit on the basis of supplementary invoice can be denied only on account that supplier was not liable to pay duty?

- Whether benefit of cenvat can be denied to appellant when duty was paid by supplier on account of demand created by the department?

Appellant’s Contention:- Appellant submits that even if the duty has been paid in excess of the amount finally held to be payable, unless the excess duty paid has been refunded, the assessee could claim cenvat credit as the department could not get the duty twice.

Reliance has been placed on order of this Court dated 22-7-2010 in CEA No.42 of 2010 Commissioner Central Excise, Chandigarh v. M/s. Guwahati Carbons Ltd. wherein after referring to earlier judgments of this Court in CCE v. Ranbaxy Labs Ltd [2006 (203) E.L.T. 213] and CCE v. Swaraj Automotives Ltd [2002 (139) E.L.T. 504] and judgment of Madras High Court in CCE v. CEGAT, Chennai [2006 (202) E.L.T. 753] the plea of the assessee was upheld.

Reasoning of Judgment:- The High Court held that in view of the judgments relied upon, the questions are answered in favour of the assessee.

Decision:- Appeal allowed.

Comments

PJ/Case Laws/2011-12/1395

Post a Comment

Query