2017 (12) TMI 1840 - AT - Central Excise

CENVAT Credit - transit loss - short receipt of inputs - benefit of credit on duty paid by the input supplier of Bulk Liquid Cargo to the extent such cargo was lost during transit, was denied - HELD THAT - The issue stands decided against the Revenue, in the same assessees case in the decision of the Tribunal reported as COMMISSIONER OF C. EX., VAPI VERSUS SAVITA CHEMICALS LTD. 2007 (4) TMI 404 - CESTAT, AHMEDABAD - even though the said decision in the same assessees case were placed before the lower authorities, they have tried to distinguish the same on the technical ground by observing that the appellant have obtained claim for the loss either from the insurance or from the supplier. Accordingly, they have not followed the earlier decision. Such claim of loss from the insurance or from the input supplier has got nothing to do with the assessees entitlement to avail the full CENVAT Credit of the duty paid by the supplier. It may not be out of place to observe here that the input recipient is entitled to the entire duty PAID by the input supplier. The same cannot be varied at the recipients end especially when there is no allegation to show that the goods have been diverted during transit to other person - Admittedly, in the present case, the less receipt of liquid cargo is on account of the transit loss, which is bound to happen in the transportation of the liquid cargo, in which case the credit to that extent cannot be disallowed, especially when there is no variation in the quantum of duty paid by the input supplier. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT Credit for lost Bulk Liquid Cargo during transit

Analysis:
The judgment addresses the issue of denying the appellant the benefit of CENVAT Credit for duty paid by the input supplier of Bulk Liquid Cargo that was lost during transit. The Member (J) notes that the Revenue sought to disallow the credit based on the loss of cargo, which was short received by the assessee. However, the Member finds that previous decisions in the same assessee's case ruled against the Revenue on this matter. The Tribunal's decision in Commissioner of Central Excise, Vapi Vs. Savita Chemicals Ltd. and the case of Savita Chemicals Ltd. Vs. Commissioner of Central Excise, Surat established that the input recipient is entitled to the entire duty paid by the input supplier, regardless of claims for loss from insurance or the supplier. The judgment emphasizes that the recipient's entitlement to CENVAT Credit should not be affected by transit losses, especially when there is no evidence of diversion of goods. The loss of liquid cargo during transportation, a common occurrence, should not lead to the disallowance of credit, particularly when the duty paid by the supplier remains unchanged.

The Member criticizes the lower authorities for attempting to distinguish the earlier decisions based on technical grounds related to claims for loss from insurance or the supplier. The judgment clarifies that such claims do not impact the recipient's right to avail full CENVAT Credit for duty paid by the supplier. It is highlighted that the duty paid by the input supplier should be fully available to the recipient, without alteration, unless there is evidence of diversion to another party. In the present case, where the shortfall in liquid cargo receipt is due to transit loss, the judgment asserts that disallowing credit in such circumstances is unwarranted, especially when the duty paid to the supplier remains constant. Consequently, the Member sets aside the impugned order and allows the appeal, providing consequential relief to the appellant.

In conclusion, the judgment emphasizes the principle that the entitlement to CENVAT Credit of duty paid by the input supplier should not be affected by transit losses, and the recipient should receive the full benefit of the duty paid. The decision underscores the importance of consistency in applying legal precedents and ensuring that technical distinctions do not undermine the fundamental rights of the assessee to claim credit for duty paid by the supplier.