2011 (7) TMI 253 - AT - Central Excise

Tribunal allows CENVAT credit on excess duty, dismisses Revenue's appeal

M/s Cipla Ltd. & Others Versus Commissioner of Customs Central Excise, Pune III

The Tribunal ruled in favor of the appellants, holding that the denial of CENVAT credit on excess duty paid on inputs was unjustified. It found that the ... CENVAT credit - Provisional assessment - Held that: input supplier has actually paid higher quantum of duty and on the final assessment, has not claimed refund of the same - It is significant to note that the rule allowed credit of duty paid on inputs/capital goods rather than credit of duty payable on the goods. Therefore, whatever duty was paid by the input manufacturer/supplier should be available as CENVAT credit to the manufacturer of the final product - Decided in favour of the assessee Issues:1. Denial of CENVAT credit on excess duty paid on inputs by manufacturers/suppliers.2. Penalty imposed on a functionary of the company.3. Denial of CENVAT credit and penalty imposed on M/s Meditab Specialities Pvt Ltd.4. Disallowance of CENVAT credit and penalty imposed on M/s MSPL.5. Challenge to Commissioner (Appeals) decision in Appeal No. E/624/08.6. Interpretation of CENVAT Credit Rules and applicability of previous judgments.Analysis:1. The appeals involved the denial of CENVAT credit on excess duty paid on inputs by manufacturers/suppliers. The case revolved around the adjustment of excess duty paid by sister units against the duty found payable upon finalization of provisional assessments. The Revenue sought to deny CENVAT credit of the differential duty amount to the assessee, leading to disallowance, recovery, and penalty imposition by the adjudicating authority. Similar orders were passed against other units of the company, leading to multiple appeals.2. Appeal No. E/1412/07 was filed against the penalty imposed on a functionary of the company. The penalty was challenged in this appeal.3. M/s Meditab Specialities Pvt Ltd contested the denial of CENVAT credit and penalty imposed on them for the excess duty paid by the input manufacturer. The lower authorities disallowed the credit and imposed penalties, leading to an appeal against the Order-in-Original.4. M/s MSPL also faced disallowance of CENVAT credit and penalty imposition for excess duty paid on inputs. The original authority confirmed the demand and penalty, which was challenged in an appeal against the Appellate Commissioner's order.5. Appeal No. E/624/08 challenged the decision of the Commissioner (Appeals) regarding the disallowance of CENVAT credit and penalty imposition. The department contested the order in this appeal.6. The interpretation of the CENVAT Credit Rules and the applicability of previous judgments were crucial in resolving the issues. The parties argued that the denial of credit based on the duty paid by the input manufacturers/suppliers was not justified. Citing relevant judgments, including those of the Hon'ble Supreme Court and the High Court of Bombay, the Tribunal held that the credit availed by the parties on inputs was legitimate as per the rules. The Tribunal dismissed the Revenue's appeal and allowed other appeals, concluding that the demand of duty and penalties imposed were unsustainable in law.