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2016 (4) TMI 626 - AT - Central ExciseRejection of of value adopted by appellant and imposition of penalty under Rule 26 & 27 of Central Excise Rules 2002 - valuation adopted for removal of finished goods viz., M.S. Ingots was rejected on the ground that the appellant has not paid duty on CAS-4 value but paid duty on the market value which was slightly on the higher side - Held that:- Rules entitled the recipient manufacturer to avail of benefit of duty paid by supplier manufacturer and the quantum of duty already determined by jurisdictional officers of supplier unit cannot be contested or challenged by officers in charge of recipient unit. Even though Unit II and Unit I have the same jurisdictional officer, there was no proposal to reassess the clearance of Unit II and therefore, the Department has erred in denying the credit to Unit I. In view of the above, Rule 3(1) of the Cenvat Credit Rule allows credit of duty “paid” by the input manufacturer and not the duty payable by the said manufacturer. As such, the entire amount of duty, which the Appellant has taken credit, having been paid by the manufacturer/ supplier, who has not subsequently claimed any refund on account of reduction of assessable value of the inputs, the Appellant would be entitled to the entire Cenvat credit. Therefore, the impugned order is liable to be set aside. When the demand itself is not sustainable as brought out above, the question of payment of interest does not arise. Therefore, demand of interest in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 is not sustainable. Since the duty demand is set aside, the various penalties viz. penalty under Rule 15(2) of CER, 2004 read with see 11 AC, Rule 26 & Rule 27 is set aside.
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