2022 (11) TMI 792 - AT - Central Excise

Tribunal Grants Appellant Cenvat Credit, Overturns Penalty Decision

Sunrise Containers Ltd. and Ramesh Pawle Versus C.C.E. & S.T. -Vapi

Sunrise Containers Ltd. and Ramesh Pawle Versus C.C.E. & S.T. -Vapi - TMI Issues:- Whether the appellant is entitled to cenvat credit for duty paid by the supplier against invalidation of advance authorization under various advance licensesRs.- Whether the duty paid by the supplier is admissible as cenvat credit to the appellant even if it was not payable by the supplierRs.- Whether the appellant is entitled to cenvat credit based on relevant legal provisions and precedentsRs.Analysis:1. The appellant, engaged in manufacturing Pet preforms, purchased inputs with central excise duty paid by the supplier against invalidation of advance authorization under advance licenses. The department contended that such purchases were exempted under FTP 2009-14, hence the appellant was not entitled to cenvat credit. The adjudicating authority demanded the cenvat credit amount, leading to the present appeals. 2. The appellant's counsel argued that duty paid on inputs entitles the recipient to cenvat credit, even if not payable by the supplier. Citing relevant judgments like SHRIRAM CONSOLIDATED PVT. LTD., MDS SWITCHGEAR LTD., and NAHAR GRANITES LTD., the counsel emphasized the recipient's right to cenvat credit on duty-paid inputs.3. The Tribunal, after considering submissions, noted that the supplier had duly paid the duty on inputs received by the appellant for manufacturing final products. It was established that compliance with Cenvat Credit Rules, 2004 was met, and the duty payment by the supplier entitled the appellant to cenvat credit, as per legal precedents.4. Referring to the case of DCM SHRIRAM CONSOLIDATED PVT. LTD., the Tribunal affirmed that duty paid on inputs procured against invalidated advance licenses was admissible as cenvat credit. The judgment emphasized that the duty payment by the supplier was conclusive for the recipient's eligibility for cenvat credit.5. The Gujarat High Court's decision in NAHAR GRANITES LTD. reiterated the entitlement of manufacturers to cenvat credit for duty-paid inputs, even if the duty was not legally payable. The Court emphasized that when the department accepted duty payments without dispute, the recipient's right to cenvat credit remained intact.6. In light of the legal provisions and precedents, the Tribunal concluded that the duty paid by the supplier against invalidation of advance authorization entitled the appellant to cenvat credit. The impugned order demanding cenvat credit was set aside, and the penalty on the appellant was also revoked due to the unsustainable demand.7. The judgment highlighted that once duty is paid by the supplier, the recipient's right to cenvat credit is established, irrespective of the duty's legal nature. The decision aligned with established legal principles and upheld the appellant's entitlement to cenvat credit based on duty-paid inputs.