Appellate authority upholds EOU's credit claim, emphasizing duty payment responsibility lies with supplier

The appellate authority upheld the Commissioner (Appeals)'s decision, ruling in favor of the respondent 100% EOU. It emphasized that the duty payment issue should have been addressed by the Central Excise Officer with jurisdiction over the supplier. The recipient EOU was found entitled to credit on duty paid by the supplier, as the duty had been accounted for in statutory records. The decision highlighted that the recipient could not be penalized for duty payment issues of the supplier, ultimately rejecting the Revenue's appeal.

---

---

Issues:
1. Interpretation of duty payment by 100% EOU sister units.
2. Admissibility of credit on duty paid by the supplier.
3. Jurisdiction of Central Excise Officer over duty payment.

Analysis:
The case involved a dispute where a 100% EOU received goods from its sister units, which had paid duty on the goods. The Revenue contended that the duty payment by the sending 100% EOU to another 100% EOU was not appropriate, leading to proceedings against the recipient EOU. The adjudicating authority confirmed a demand of around Rs. 33.70 lakh against the recipient EOU, invoking a longer period of limitation.

The Commissioner (Appeals) considered the case and referred to legal precedents, emphasizing that the liability to pay duty cannot be questioned by authorities other than those having jurisdiction over the manufacturer. It was highlighted that once duly paid invoices were received, credit could not be denied, and any action for wrong payment of duty should be taken at the place where duty was paid. The Commissioner (Appeals) found that the credit on duty paid by the supplier 100% EOU was admissible to the recipient EOU, as the duty had been paid and accounted for in statutory excise records.

The appellate authority granted relief to the respondent EOU, stating that the issue of whether the duty could have been paid by the sending 100% EOU should have been adjudicated by the Central Excise Officer having jurisdiction over the supplier. It was clarified that credit of duty paid, not duty payable, was available, and the officers at the recipient's factory could not challenge the duty payment by the supplier. The order of the Commissioner (Appeals) was upheld, rejecting the Revenue's appeal based on the reasoning that the duty had been paid by the supplier and the recipient had rightfully availed credit on the duty paid.

In conclusion, the judgment focused on the admissibility of credit on duty paid by the supplier 100% EOU to the recipient EOU, emphasizing the jurisdictional aspect of duty payment and the rights of the recipient to avail credit on the duty actually paid by the supplier.

---