Appellant entitled to Cenvat credit on inputs despite supplier issue

The appellant successfully appealed against the denial of Cenvat credit on inputs due to the supplier not manufacturing goods. The court held that the appellant, who had paid duty on the inputs procured from the supplier, was entitled to Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004. The judgment emphasized that the appellant should not be penalized for the supplier's actions and confirmed the appellant's right to avail Cenvat credit on duty paid inputs regardless of the supplier's manufacturing status. The impugned order was set aside, and the appeal was allowed, granting the appellant relief.

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Issues: Denial of Cenvat credit on inputs due to supplier not manufacturing goods.

Analysis:
1. The appellants appealed against the order denying Cenvat credit on inputs because the supplier did not manufacture the goods, leading to the contention that the inputs were not duty paid and thus the appellant was not entitled to Cenvat credit.

2. Upon hearing the parties and considering the submissions, the case revolved around the allegation that the supplier did not manufacture the PE/PVC compound granules, the inputs procured by the appellant, and therefore, the duty paid by the supplier was in question, affecting the appellant's Cenvat credit eligibility.

3. The facts established that the supplier had indeed paid duty on the raw material procured by the appellant, and the appellant had also paid duty to the supplier. According to Rule 3 of the Cenvat Credit Rules, 2004, an assessee who procures inputs on duty payment is entitled to take Cenvat credit. Thus, the appellant, having suffered duty, was rightfully entitled to avail Cenvat credit on the duty paid inputs, irrespective of whether the supplier manufactured the goods or not.

4. The judgment emphasized that the appellant should not be penalized for the supplier's actions regarding manufacturing, as the appellant fulfilled their duty payment obligations. It was clarified that the appellant's entitlement to Cenvat credit should not be questioned based on the supplier's manufacturing status, and the adjudicating authority cannot deny Cenvat credit to the appellant in such circumstances.

5. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief, affirming the appellant's correct availing of Cenvat credit on duty paid inputs.

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