2006 (6) TMI 110 - AT - Central Excise

Tribunal allows Cenvat credit based on supplier's duty rate, not standard rate

NAHAR INDUSTRIAL ENTERPRISES LTD. Versus CCE, CHANDIGARH

The Tribunal set aside the order denying Cenvat credit to the appellant due to a duty rate discrepancy, ruling that the appellant could avail credit based ... when revenue is not disputing the payment of duty at the ends of manufacturer, the objection cannot be raised while taking credit of duty by the manufacturer who is using these goods as inputs in the manufacture of dutiable goods. In the present case as revenue is not objecting to the payment of duty at the rate of 9.2% at the time of clearance of goods, therefore the credit cannot be restricted to 8% at the end of the appellant who are recepient of the inputs. Issues:1. Denial of Cenvat credit based on duty rate discrepancy.Analysis:The appellant filed an appeal against the order denying them the benefit of Cenvat credit due to a difference in the duty rates paid by the supplier of inputs. The appellant argued that since the revenue does not object to the higher duty paid by the supplier, they should be entitled to take credit based on the actual duty paid by the supplier. They relied on Tribunal decisions that supported this stance.The revenue contended that the goods are liable to duty at 8%, and the manufacturer had paid excess duty to pass on higher credit, thus the appellant should not be entitled to the excess credit. However, the revenue did not dispute the acceptance of goods cleared at 9.2% duty by the supplier, and the appellant was availing credit based on the duty paid by the supplier.The Tribunal, considering the arguments and precedents cited, held that if the revenue does not object to the higher duty paid by the supplier at the time of clearance, the appellant should not be restricted to taking credit at 8%. Therefore, the impugned order denying the Cenvat credit was set aside, and the appeal was allowed.