2018 (5) TMI 1291 - AT - Central Excise

Tribunal grants appellant relief under Rule 4 of CCR, emphasizes credit rights

The Tribunal ruled in favor of the appellant, setting aside the Order-in-Original and granting relief. The decision emphasized the appellant's right to ... CENVAT credit - duty paying documents - Rule 9 of CCR - it was alleged that the invoices issued to the appellant by M/S. PSPL were not proper documents as envisaged under Rule 9 of the Rules. Held that: - the assessee in the present case has rightly taken the CENVAT credit because the dispute relating to the manufacturer cannot be reopened at the recipient end and hence the duty paid nature is not disputed and received under a valid document, the appellant cannot be expected to examine the legal disputes of the supplier - Tribunal in the case of Advance Diesel Engines Ltd. as well as CCE Vs. Deepthi Formulations Pvt. Ltd. [2013 (3) TMI 547 - CESTAT BANGALORE] wherein it has been held that when the supplier of inputs paid duty thereon and issued a valid invoice and the inputs so received in assessee's factory were used in the manufacture of final products, then the assessee is entitled to take credit of the duty paid on inputs and the question whether inputs had arisen out of process of manufacturer is irrelevant - appeal allowed - decided in favor of appellant. Issues:1. Allegation of inadmissible cenvat credit availed by the appellant.2. Rejection of appeal by Commissioner(Appeals) upholding Order-in-Original.3. Dispute regarding the nature of activity by M/S. Pan Synthetics Private Limited.4. Allegations of suppression of facts and intention to evade payment of duty.5. Recovery of cenvat credit, interest, and imposition of penalty.6. Appellant's defense based on Rule 4 of Cenvat Credit Rules, 2004.7. Comparison with similar cases where demand was dropped.8. Legal dispute on the duty paid by the supplier and its impact on the appellant's credit availed.Analysis:1. The appeal contested the impugned order alleging inadmissible cenvat credit availed by the appellant based on the duty paid by M/S. Pan Synthetics Private Limited on certain materials. The appellant was accused of suppressing facts and evading duty payment, leading to the recovery of cenvat credit, interest, and penalty under Rule 14 of the Cenvat Credit Rules, 2004.2. The Commissioner(Appeals) rejected the appellant's appeal, upholding the Order-in-Original. The appellant argued that the impugned order lacked proper consideration of facts and law, emphasizing the appellant's right to credit under Rule 4 of CCR. The appellant also highlighted discrepancies in the treatment of similar cases by the Department.3. The dispute revolved around the nature of the activity performed by M/S. Pan Synthetics Private Limited, specifically regarding whether the slitting of plastic film rolls constituted manufacturing. The appellant contended that they rightfully availed the credit as per CCR provisions.4. The defense presented by the appellant stressed that the duty paid by the supplier should entitle the buyer to avail credit without delving into the supplier's manufacturing status. Reference was made to a similar case where the demand was dropped, indicating inconsistencies in the Department's approach.5. The Tribunal's decision relied on legal precedents to support the appellant's position, emphasizing that the appellant, as the recipient of goods with valid documents and duty paid by the supplier, should not be penalized for the supplier's compliance issues. The judgment favored the appellant, setting aside the impugned order and granting consequential reliefs.6. The judgment highlighted the appellant's entitlement to credit based on the duty paid by the supplier and the validity of the invoices received, irrespective of the supplier's manufacturing status. The ruling emphasized the irrelevance of the manufacturing process in determining credit eligibility, ultimately favoring the appellant's appeal.