Whether Cenvat Credit admissible even when excess duty paid on inputs?

PJ/Case Laws/2012-13/1291

Case:- V.G. STEEL INDUSTRY Versus COMMISSIONER OF CENTRAL EXCISE

Citation:-2012 (27) S.T.R. 94 (P & H)

Brief Facts:-The appellant claimed cenvat credit to the extent of duty paid on purchase of inputs. The same 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 order of Adjudicating Authority has been affirmed by the Commissioner as well as by the Tribunal. Hence, the present appeal.

Appellant Contention’s:-The Appellant submits that even when the duty has been paid in excess of the amount finally held to be payable, cenvat credit cannot be denied unless the excess duty paid has been refunded. The assessee could very well claim the cenvat credit as the department could not get the duty twice and relied upon following cases:
Ø CCE v. Ranbaxy Labs Ltd.
Ø CCE v. Swaraj Automotives Ltd.
Ø CCE v. CEGAT

Respondent Contention’s:-They have contended that the law on the point that manufacturer can avail credit only to the extent of the duty paid on the inputs purchased is well settled and in the absence of inputs being subjected to duty payment, question of availing modvat credit by manufacturer procuring such inputs does not arise. Once, the authorities held that the supplier of inputs was not subjected to duty payment, question of appellant seeking to avail modvat credit in respect of inputs so supplied by the supplier does not arise. Further, it was also contended that in case the supplier had paid the duty wrongly or by mistake, that 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. Therefore, cenvat credit is not available to the appellant.

Reasoning of Judgement:-We have considered the submissions made by both the sides. The 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, 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. Szvaraj Autotnotives 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. The respondent is unable to distinguish the applicability of the judgment relied upon on behalf of the appellant. In view of above, we stand in favour of the assessee. The appeal is allowed.

Decision: -Appeal Allowed.

Comments:It has been pronounced many times that as far as duty has been paid on the inputs, cenvat credit of the duty paid is admissible irrespective of the fact that it was required to be paid at lower rate.

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PJ/Case Laws/2012-13/1291

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