Tribunal Upholds Decision Dismissing Revenue Appeal on Correctness of Availed Credit

The Commissioner(Appeals) decision to set aside the demand was upheld by the Tribunal, leading to the dismissal of the Revenue's appeal. The Tribunal found that the credit availed by the respondent was correct, making its utilization for duty payment legal. The demand based on nonpayment of duty due to alleged fraudulent passing of credit was deemed untenable, as the Tribunal had previously established the correctness of the credit.

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Issues: Allegation of fraudulent passing of credit by supplier, Utilization of wrongly availed Cenvat credit for payment of duty, Dispute over demand confirmation, Appeal against Commissioner(Appeals) decision

In this case, the appellant availed credit on input received from a supplier, who was alleged to have fraudulently passed on the credit. The appellant used this credit to pay duty on goods cleared for export. The demand was confirmed on the grounds that the utilization of the credit for duty payment was illegal due to the alleged fraudulent passing of credit. Simultaneously, a show cause notice was issued for denial of the same credit. The Tribunal's division bench previously dropped proceedings related to the alleged wrong availment of credit, stating that there was no mistake on the appellant's part. The Commissioner(Appeals) allowed the respondent's appeal, leading to the Revenue's appeal.

The Revenue argued that the supplier fraudulently passed on the credit, making it unavailable to the respondent, and thus, the duty payment using such credit was incorrect. They contended that the goods cleared using this credit should be treated as clearance without duty payment. On the other hand, the respondent's counsel argued that a separate proceeding had settled the issue of the credit's correctness in favor of the respondent, making its utilization legal and correct.

Upon review, the Tribunal found that the demand was based on nonpayment of duty due to the utilization of wrongly availed credit. The Tribunal's previous order had already established the correctness of the credit availed by the respondent, making its utilization legal. Consequently, the demand confirmed by the Adjudicating authority was deemed untenable. The Commissioner(Appeals) rightly set aside the demand, leading to the dismissal of the Revenue's appeal.

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