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2019 (12) TMI 525 - AT - Central ExciseCENVAT Credit - inputs were cleared as such by the supplier - credit denied for the reason that the subject goods has not been manufactured by the supplier - Rule 3(5) of the CENVAT Credit Rules, 2004 - HELD THAT:- As per Rule 3(5) of the CENVAT Credit Rules, 2004, which deals with the bought out goods, states that when inputs or capital goods are removed ‘as such’ from the factory of the manufacturer, the manufacturer shall pay an amount equal to the credit availed in respect of such input or capital goods and such removal shall be made under the cover of central excise invoice in the manner prescribed in Rule 9 of the said Credit Rules. Further, as per Rule 3(6) of the Credit Rules, the amount paid under aforesaid Rule 3(5) shall be eligible as CENVAT credit as if it was a duty paid by the person who removed such goods - Therefore, in view of the specific provisions contained in Rule 3(5) and 3(6) aforesaid, the appellant company receiving input from the supplier who has removed the said goods ‘as such’ (being bought out goods) is legally entitled to credit even if the said goods have not been manufactured by the supplier. Thus, the appellant is legally entitled to avail credit on inputs which though not manufactured by the supplier, has been removed by the supplier on the strength of duty paid excise invoice particularly in the fact of the case that goods have been physically received by the appellant for use in manufacture. The entire proceedings against the appellant for denial of credit, there is no allegation or finding that the appellant has intentionally availed irregular credit with ulterior motive or that the credit has been availed wrongly in collusion with the supplier. In absence thereof, denial of credit would be harsh and highly unwarranted - credit is legally eligible and therefore the impugned demand is set aside. Appeal allowed - decided in favor of appellant.
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