Appellants restricted to 95% credit on duty paid for inputs; court emphasizes compliance with legal provisions.

The appellants were not entitled to claim 100% credit of duty paid on inputs as per relevant notifications, which allowed credit only up to 95%. Despite initially complying with this limitation, they later mistakenly availed Cenvat credit for the full amount of differential duty mentioned in supplementary invoices. The court upheld the department's contention that the credit was restricted to 95% of the differential duty paid on inputs, emphasizing the importance of strict adherence to legal provisions governing input duty credit to prevent inadvertent non-compliance.

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Issues: Entitlement to 100% credit of duty paid on inputs, interpretation of relevant notifications, availing Cenvat credit of differential duty on supplementary invoices.

In this case, the issue at hand was whether the appellants were entitled to 100% credit of the duty paid on inputs received in their factory and used in the manufacture of their final product during a specific period. The relevant notifications, specifically Notification No. 5/94-CE (NT) dated 1-3-94 as amended by Notification No. 14/98-CE (NT) dated 2-6-98, allowed them to claim credit only to the extent of 95% of the duty paid on the inputs. The appellants initially availed this benefit based on the original invoices from their suppliers. However, they later received supplementary invoices indicating payment of differential duty by the suppliers and proceeded to take Cenvat credit of this differential duty. The department contended that the credit was limited to 95% of the differential duty paid on the inputs. The lower appellate authority agreed with this view, leading to the appellants' grievance and subsequent appeal.

Upon examination, it was clear that the law stipulated the appellants were entitled to take input duty credit only to the extent of 95% during the specified period. The appellants were cognizant of this limitation as they had initially taken credit in accordance with it. However, when they received supplementary invoices showing the payment of additional duty by the suppliers for the same inputs, they mistakenly opted to take credit for the entire differential duty mentioned in these supplementary invoices. This action overlooked the prescribed limitation, which applied not only to the original invoices but also to the supplementary ones. Consequently, the impugned order was upheld, and the appeal was dismissed.

The judgment highlights the importance of adhering to the specific provisions of the law regarding the entitlement and utilization of input duty credit. It underscores the need for taxpayers to diligently consider and apply the prescribed limitations, even when dealing with supplementary invoices, to avoid any inadvertent non-compliance with the regulatory framework governing such credits.

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