2006 (11) TMI 494 - AT - Central Excise

Appellate Tribunal allows retention of Cenvat Credit on input invoices despite duty non-payment

The Appellate Tribunal CESTAT, Mumbai ruled in favor of the appellants, allowing them to retain the Cenvat Credit on input invoices despite the input ... Cenvat/Modvat - Default in payment of duty by input manufacturer Issues Involved: The issues involved in the judgment are the entitlement of Cenvat Credit on input invoices where duty was shown as payable but not paid by the input manufacturer, and the time limitation for issuing a Show Cause Notice.Entitlement of Cenvat Credit on Input Invoices:The appellants, engaged in manufacturing Iron & Steel products, availed Cenvat credit based on input invoices from M/s. Viraat Ispat Limited. The input manufacturer had defaulted in paying duty on a fortnightly basis, leading to a notice for the appellants to reverse the Cenvat Credit. The Tribunal referred to established case laws such as Prachi Poly Products Ltd. and Spic Pharmaceuticals Division, along with a Circular by the Central Board of Excise & Customs, to support the appellants' position. The appellants had taken reasonable precautions, received goods regularly, and paid the excise duty amount to M/s. Viraat Ispat Limited in good faith. The Order-in-Original also recognized the appellants' bona fide actions. Consequently, the Tribunal ruled in favor of the appellants, stating that the Cenvat Credit was rightfully availed and could not be reversed as directed by the lower authorities.Time Limitation for Show Cause Notice:Additionally, the judgment noted that the demand made on the appellants was time-barred as the Show Cause Notice was issued beyond the statutory period of limitation.In conclusion, the Appellate Tribunal CESTAT, Mumbai allowed the appeal in favor of the appellants, emphasizing their entitlement to the Cenvat Credit on the input invoices and highlighting the time limitation aspect regarding the Show Cause Notice.