Tribunal decision on CENVAT credit for parts & exempted goods under Rule 6(3)

The tribunal set aside the demand for CENVAT credit on parts and accessories with nil rate of duty, while upholding the denial of CENVAT credit on exempted goods under Rule 6(3) of the Cenvat Credit Rules, 2004. The appeal was disposed of accordingly.

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Issues:
1. Availing CENVAT credit on parts and accessories with nil rate of duty.
2. Denial of CENVAT credit on exempted goods under Rule 6(3) of Cenvat Credit Rules, 2004.

Issue 1: The appellants were engaged in manufacturing Syringe classifiable under a specific sub-heading of the Central Excise Tariff Act, 1985. They availed CENVAT credit on parts and accessories of Syringe, which had a nil rate of duty under a particular notification. A show cause notice was issued alleging that the supplier of parts and accessories erroneously paid duty at a different rate, making the appellant ineligible for CENVAT credit. The adjudicating authority confirmed the demand of duty along with interest and imposed a penalty. The appellant argued that the input supplier paid duty as per invoices, citing relevant legal decisions supporting their compliance with Rule 3 of the Cenvat Credit Rules, 2004. The tribunal found that the input supplier paid Central Excise duty, not exempted duty, making the appellant eligible for CENVAT credit.

Issue 2: The denial of CENVAT credit on exempted goods amounting to a specific sum was contested by the appellant, claiming the invoices showed Central Excise duty and thus were covered under Rule 3 of the Cenvat Credit Rules, 2004. The Revenue argued that the appellant was aware of the exempted status of the goods and the amount paid was not Central Excise duty but under Rule 6(3) of the Rules. The tribunal noted discrepancies in the invoices and the actual nature of the payments made by the input supplier. It held that the appellant had taken irregular credit knowingly and upheld the denial of CENVAT credit on exempted goods. The extended period of limitation was applied in this case.

In conclusion, the tribunal set aside the demand for CENVAT credit on parts and accessories with nil rate of duty, while upholding the denial of CENVAT credit on exempted goods under Rule 6(3) of the Cenvat Credit Rules, 2004. The appeal was disposed of accordingly.

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