2016 (1) TMI 816 - AT - Central Excise

Disallowance of Cenvat credit - penalty imposed equal to the said credit amount - Held that - In the absence of any dispute about the receipt of inputs under the cover of the invoices issued by the supplier carrying duty payment details credit availed by the recipients cannot be denied. - Decided in favour of assessee.

Summary

Issues:
Recovery of inadmissible Cenvat credit based on supplier's eligibility for concession under Notification No. 56/2002-CE; Disallowance of Cenvat credit and imposition of penalty by the Commissioner; Jurisdictional authority's decision on non-payment of duty by the supplier; Denial of credit to the appellant based on the supplier's actions; Compliance with Cenvat Credit Rules and payment to the supplier; Applicability of Tribunal decisions on similar cases to the present proceedings.

Analysis:
The judgment involves two appeals challenging the order-in-original of the Commissioner of Central Excise, Delhi, regarding the recovery of inadmissible Cenvat credit taken by the appellants on inputs received from a supplier. The appellants, engaged in manufacturing wires and cables, availed Cenvat credit on inputs from M/s Satya Metals, Jammu, and M/s All India Metal Traders, Delhi. The dispute arose from the eligibility of M/s Satya Metals for a concession under Notification No. 56/2002-CE. The Commissioner disallowed the credit and imposed a penalty equal to the credit amount, leading to the appeals.

The appellant's counsel argued that the inputs were received with proper documentation, and payments were made to the supplier in compliance with Cenvat Credit Rules. They contended that the Delhi Commissioner lacked jurisdiction over the supplier's eligibility for concessions and that the actions of the Jammu Central Excise officers did not justify denying the appellant's credit. The counsel highlighted the absence of a conclusive finding by the competent authority regarding the supplier's duty payment irregularities, emphasizing that the appellants received inputs under duty-paying documents and fully paid the supplier.

The Tribunal found the Commissioner's order legally unsustainable, noting that the denial of credit lacked a basis in law. It highlighted the absence of evidence supporting the non-payment of duty by the supplier and emphasized the appellants' compliance with duty payment requirements. The Tribunal cited previous decisions to support its ruling, emphasizing that credit availed by recipients cannot be denied when inputs are received under proper duty-paying documentation. Ultimately, the Tribunal set aside the Commissioner's order and allowed the appeals, concluding that the denial of credit was unjustified.

In conclusion, the judgment addresses various legal aspects, including jurisdictional authority, compliance with Cenvat Credit Rules, and the responsibility of recipients regarding supplier actions. It underscores the importance of proper documentation and compliance with legal requirements in determining the admissibility of Cenvat credit. The Tribunal's decision provides clarity on the issue at hand and sets a precedent for similar cases involving the denial of credit based on supplier actions.