Tribunal allows Cenvat credit appeal, upholds manufacturer's entitlement to credit despite supplier price reductions.

The Tribunal allowed the appeal, setting aside the denial of Cenvat credit for the period 2002-03 to 2006-07 and the imposition of penalty. It held that the manufacturer of final products is entitled to Cenvat credit of duty paid on inputs as evidenced by relevant invoices, regardless of subsequent price reductions by the supplier. The Tribunal emphasized that the credit cannot be reduced due to supplier actions, reaffirming the established legal principle that such credit is admissible.

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Issues:
Denial of Cenvat credit for the period 2002-03 to 2006-07 and imposition of penalty.

Analysis:
The appeal in this case was against the denial of Cenvat credit amounting to Rs. 84,47,329/- for the period 2002-03 to 2006-07, including Education Cess and Higher Education Cess, as well as against the imposition of an equal amount of penalty. The Department contended that the Cenvat credit was not admissible to the buyer (manufacturer of final products) as the price of the goods was subsequently reduced by the supplier. However, the appellants argued that a manufacturer of final products is entitled to Modvat/Cenvat credit of the duty paid on inputs by the manufacturer/dealer of inputs as evidenced by the relevant statutory invoices. They relied on various decisions to support their plea.

The Tribunal carefully considered the submissions from both sides. It was noted that the circular and judgment cited by the Department were not relevant to the issue at hand, as they pertained to the valuation of excisable goods, not the admissibility of Cenvat credit. The Tribunal reiterated the settled law that Modvat/Cenvat credit of the duty paid by the input manufacturer/supplier, as evidenced by relevant invoices, is admissible to a manufacturer of the final product. This principle was supported by the decisions cited by the appellants' counsel. Therefore, the Tribunal set aside the impugned order, allowed the appeal, and disposed of the application.

In conclusion, the Tribunal held that the Cenvat credit taken by the appellants based on relevant invoices covering the purchase of inputs cannot be subsequently reduced due to a price reduction by the input supplier. The Tribunal's decision was based on the established legal principle that Modvat/Cenvat credit is admissible to the manufacturer of the final product, as supported by relevant case law.

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