2015 (11) TMI 1560 - AT - Central Excise

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 ... Cenvat credit on inputs - entitlement under Rule 3 of the Cenvat Credit Rules, 2004 - input procured on payment of duty - supplier's non-manufacture irrelevant to purchaser's creditCenvat credit on inputs - entitlement under Rule 3 of the Cenvat Credit Rules, 2004 - supplier's non-manufacture irrelevant to purchaser's credit - Whether the appellant is entitled to Cenvat credit on inputs procured from a supplier who allegedly did not manufacture the goods - HELD THAT: - The Tribunal found that the appellant had paid duty on the inputs procured from the supplier and that Rule 3 of the Cenvat Credit Rules, 2004 confers entitlement to take Cenvat credit where the assessee has procured inputs on payment of duty. The fact that the supplier allegedly did not manufacture the goods and may seek refund of duty paid does not affect the appellant's statutory entitlement to credit. Consequently the adjudicating authority was not justified in denying credit to the appellant on the ground of the supplier's manufacturing status. [Paras 4, 5]Impugned order denying Cenvat credit set aside; appeal allowed and credit upheld with consequential relief if any.Final Conclusion: Appeal allowed: appellant entitled to Cenvat credit on duty-paid inputs procured, and denial on the basis that the supplier did not manufacture the goods was set aside. 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.