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2024 (2) TMI 193 - CESTAT CHENNAIDenial of Cenvat Credit - Area Based Exemption - allegation that the supplier had wrongly availed North East exemption N/N. 20/2007-CE, by paying excess duty through the mode of adopting higher value as determined under Section 4A of Central Excise Act, 1994 instead of adopting the value as under Section 4 of Central Excise Act, 1994 r/w Rule 8 of CVR 2008 - whether the credit of duty paid on Mosquito Repellent Refills procured from GCPL, Guwahati are legal and proper? - HELD THAT:- Rule 12 of Cenvat Credit Rules, 2004 states that in the case of Area Based exemption notification, the credit on inputs and capital goods shall be admissible, as if no portion of the duty paid on such inputs or capital goods was exempted under the said notification. The rule carves out a special provision wherein, by Area based exemption notification, even if the duty paid by manufacturer is refunded, the Cenvat credit availed of duty paid on inputs and capital goods would be eligible. The appellant has rightly availed the Cenvat credit of the duty collected from them by the manufacturer who has availed area based exemption notification. The appellant does not have any say or control as to the method of valuation adopted by the manufacturer, who supplied the inputs to the appellant. Cenvat credit cannot be denied at the recipient’s end, without any legal basis. The High Court of Madras, in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I VERSUS CEGAT, CHENNAI [2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] High Court of Judicature at Madras, had occasion to analyse a similar situation wherein, the supplier of goods was unaware of an exemption notification and paid the duty on the final product which was passed on to the assesse. The department was of the view that as the supplier is eligible for exemption, the assesse is not eligible for credit. The High Court of Madras held that if the duty has been paid on the inputs, Cenvat credit cannot be denied. In the case of BALAKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR-I [2015 (1) TMI 938 - CESTAT NEW DELHI], the issue under consideration was whether the goods supplied to the appellant without availing the benefit of Notification No.44/2001-CE (NT)/ 26.06.2001 and consequent credit passed on to assesse was eligible or not. The Tribunal followed the decision in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS VERSUS MDS SWITCHGEAR LTD. [2008 (8) TMI 37 - SUPREME COURT] to hold that credit is eligible. The denial of credit is not justified. The demand, interest and penalties cannot sustain - Appeal allowed.
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