Cenvat credit on supplementary invoices upheld where duty related to inputs under concessional duty scheme, not finished goods

Cenvat credit on duty paid through supplementary invoices was allowable where the disputed duty related to inputs received under the concessional duty scheme and not to finished goods sold by the manufacturer. Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules, 2001 applies only when the received goods are not used for the intended purpose, and the record did not show any diversion to a different use sufficient to deny credit. The show cause notice therefore proceeded on a mistaken understanding of the duty payment, and the demand was not sustainable on merits or limitation.

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Issues: Whether the respondent was entitled to Cenvat credit of duty paid through supplementary invoices on goods received under the concessional duty scheme, and whether the demand was sustainable on merits and limitation.

Analysis: The duty in question was paid in respect of the inputs received by the manufacturer under the concessional duty procedure and not in respect of the goods sold by the respondent. Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules, 2001 contemplates recovery where the received goods are not used for the intended purpose, and the material on record showed that the disputed duty related to the inputs received and later diverted, not to finished goods cleared by the respondent. The show cause notice also did not establish any use of the goods for a different purpose so as to deny the consequential credit. The demand was therefore based on a mistaken understanding of the nature of the duty payment and was not sustainable.

Conclusion: The respondent was entitled to the credit and the demand could not be sustained on merits or on limitation.

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