Appeal allowed, CENVAT credit recovery order set aside. Duty payment crucial for credit eligibility.

The appeal was allowed, setting aside the impugned order for the recovery of CENVAT credit. The Tribunal emphasized that the eligibility for credit arises upon the payment of duty in the manufacturing process, following the precedent set by a similar case. It was clarified that if duty liability is discharged by the supplier and reflected in the invoice, the appellant is entitled to claim the credit, regardless of whether certain charges are included in the assessable value.

---

---

Issues:
Recovery of CENVAT credit without eligibility due to inclusion of certain facilities in assessable value.

Analysis:
The appeal was filed against an order confirming the recovery of CENVAT credit found to have been availed without eligibility. The appellant had included the cost of certain facilities provided to their supplier in the assessable value for levy of central excise duties on clearances, resulting in the excess credit availed. The adjudicating authority denied the credit as the facilities were not includible in the assessable value.

The appellant relied on a Tribunal decision in a similar case involving Aurobindo Pharma Ltd. where it was established that duty paid inputs utilized for manufacturing entitled the appellant to avail CENVAT credit. The supplier had set up special storage tanks for liquid nitrogen, and the appellant procured these tanks on a rental basis. The Tribunal held that if the duty liability had been discharged by the supplier and reflected in the invoice, the appellant was eligible to avail the CENVAT credit. The issue was not whether the rental charges were includible in the assessable value but whether the duty liability had been fulfilled by the supplier.

Based on the precedent set by the Aurobindo Pharma Ltd. case, it was determined that the eligibility for credit arises on the payment of duty and wage in the manufacturing of excisable goods. Therefore, the recovery of CENVAT credit in the impugned order was deemed improper, and the appeal was allowed, setting aside the impugned order.

In conclusion, the Tribunal's decision highlighted the importance of duty liability discharge by the supplier and the eligibility of the appellant to avail CENVAT credit based on the payment of duty in the manufacturing process. The case emphasized the settled law that if duty liability is discharged and reflected in the invoice, the appellant is entitled to claim the credit, irrespective of whether certain charges are included in the assessable value.

---