C.C.E. & S.T.-Vapi Vs Kris Flexipacks Pvt Ltd (CESTAT Ahmedabad)
Introduction: The Central Excise and Service Tax Appellate Tribunal (CESTAT) Ahmedabad was presented with a case involving the eligibility of Cenvat credit for the recipient of goods when the excise duty on capital goods, namely ‘Engraved Ms Copper Plated Rollers,’ was paid under self-assessment by the supplier. The Department contended that since the capital goods were exempted from excise duty payment, the duty paid cannot be treated as excise duty. Consequently, the recipient should not be eligible for Cenvat credit.
Analysis: The key issue before the tribunal was whether the recipient of goods could avail Cenvat credit when the excise duty on capital goods was self-assessed and paid by the supplier, despite the goods being exempted from duty payment under an unconditional notification. The revenue argued that Cenvat credit is only available for excise duty paid as per Section 3 of the Central Excise Act, 1944, and since the duty was exempted, the supplier should not have paid it.
On the other hand, the respondent contended that the supplier had paid the duty under self-assessment, which was not objected to by the department, and thus, it attained finality. They relied on various judgments stating that once the duty payment is accepted, it cannot be considered not excise duty, and the recipient is entitled to claim Cenvat credit. The appellant also argued that their goods were not exempted, as the exemption was rescinded by a subsequent notification.
Conclusion: After considering the arguments, the CESTAT Ahmedabad ruled in favor of the respondent, upholding the decision of the Learned Commissioner (Appeals). The tribunal held that if the assessment of duty payment by the supplier has been accepted without objection, it cannot be disputed at the recipient’s end for availing Cenvat credit. The court also emphasized that if the department believed the supplier should not have paid the duty, they should have issued a show cause notice for recovery, which was not done. Therefore, the Cenvat credit on the capital goods was legally available to the recipient. This ruling highlights the importance of challenging supplier assessments to claim Cenvat credit appropriately.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the respondent is entitled for Cenvat credit in respect of Excise Duty paid on capital goods namely ‘Engraved Ms Copper Plated Rollers’ in a case where as per the department, the said Capital Goods were exempted from payment of Central Excise Duty under Notification No. 49/2006-CE dated 30.12.2006. The case of the department is that since the said Capital Goods were exempted from payment of Excise Duty under an unconditional Notification, the supplier was not supposed to pay the duty, whatever duty was paid cannot be treated as Excise Duty in terms of Section 3 of Central Excise Act,1944. Consequently, the respondent cannot take credit of any amount which is not a payment of duty in terms of Section 3, the department also placed reliance on the Circular No. 940/01/2011-CX dated 14.01.2011 though the Adjudicating Authority has denied the Cenvat Credit but Learned Commissioner (Appeal), in appeals filed by the respondent allowed the appeal therefore the present appeal filed by the revenue. The respondent also filed a cross objection.
2. Shri Tara Prakash, Learned Deputy Commissioner (AR), appearing on behalf of the revenue submits that since the capital goods were exempted under Notification No. 49/2006-CE dated 30.12.2006, whatever, duty paid by the supplier cannot be treated as duty whereas the Cenvat credit is available only in respect of Excise duty paid in terms Section 3 of Central Excise Act, 1944. Therefore, the appellant is not eligible for Cenvat credit in this position. The Learned Commissioner (Appeals) has erred in allowing the appeal of the respondent, which deserves to be set aside and revenue’s appeal be allowed.
3. On the other hand Shri Prakash Shah, Learned counsel with Shri Mihir Mehta, Advocate appearing for the respondent at the outset submits that the supplier have made the payment of duty under self-assessment procedure. The said assessment of duty payment was not objected with by the department, therefore, the said assessment attained finality. Once the duty payment has been accepted by the department and no objection was raised, it cannot be said that the duty paid by the supplier is not a duty of excise. he submits that even in case, where the excise duty is admittedly not payable but the supplier of the goods discharge the excise duty and the said payment is not objected, no objection can be raised at the recipient and in this regard he placed reliance on the following judgments:
