Tribunal mandates credit for duty paid on inputs, overturning denial decision.

The Tribunal confirmed a duty of Rs. 61,94,676 against the appellant due to the denial of credit on inputs, specifically polypropylene chips. The appellant argued they were entitled to credit as they had paid duty on the inputs, referencing a previous Tribunal decision. The Tribunal noted no reassessment against the supplier had been conducted and held that the credit of duty paid on the inputs could not be denied to the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary relief.

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Issues:
Confirmation of duty against the appellant for denial of credit on inputs.

Analysis:

1. The appellant was confirmed a duty of Rs. 61,94,676 due to the denial of credit on inputs, specifically polypropylene chips (PP chips). The appellant procured these inputs, paid duty on them, and took credit. However, it was alleged that the suppliers of the inputs had already paid excise duty on them, leading to the denial of credit. A show cause notice was issued, and after adjudication, the credit was denied, resulting in the confirmation of the demand against the appellant.

2. The appellant contended that since they had paid duty on the inputs, they were entitled to avail credit as per Rule 3 of the Cenvat Credit Rules, 2004. The appellant argued that no action had been taken against the supplier who had paid excise duty on the inputs, and therefore, credit should not be denied. Reference was made to a previous Tribunal decision in the case of MDS Switchgear Ltd., which was affirmed by the Hon'ble Apex Court.

3. The AR reiterated the findings of the impugned order during the hearing. After hearing both parties and considering their submissions, the Tribunal noted that no reassessment proceedings had been conducted against the supplier, and the assessment against the supplier had been finalized. In light of this, the Tribunal held that the credit of duty paid on the inputs could not be denied to the appellant, citing the previous Tribunal decision in the case of MDS Switchgear Ltd., which had been affirmed by the Hon'ble Apex Court.

4. The Tribunal emphasized that the rules entitled the recipient manufacturer to benefit from the duty paid by the supplier manufacturer. It was stated that the quantum of duty determined by the supplier could not be contested or challenged by the officers in charge of the recipient unit. Therefore, the Tribunal concluded that the credit could not be denied to the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.

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