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M/s. Shah Paper Mills Limited Versus Commissioner of Central Excise & S.T., Daman

2015 (10) TMI 571 - CESTAT AHMEDABAD

Disallowance of CENVAT Credit - Penalty under Rule 15(1) of the Cenvat Credit Rules - whether main appellant was eligible to take credit on the basis of cenvatable documents showing payment of duty - Held that:- duty paid on the waste kraft paper was accepted by the officer Incharge of the supplier unit M/s. SPPML. Appellant was not expected to know beyond the facts that inputs they received are covered under a valid duty paying documents. The ratio laid down in the above case laws relied upon b .....

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ed as extended period is not imposable in this case and no penalties can be imposed upon the appellant. - Decided in favour of assessee. - Appeal No. : E/639,640/2012 - ORDER No. A/10850-10851/2015 - Dated:- 22-6-2015 - Mr. H.K. Thakur, J. For Appellant : Shri Mayur Shroff, Advocate For Respondent : Shr J. Nair, Authorised Representative Per : Mr. H.K. Thakur; These appeals have been filed by the appellants against OIA No. OIA-CS/09-10/DMN/VAPI-I/2012-13 dated 04.05.2012 under which OIO No. 01/O .....

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der Rule 15(1) of the Cenvat Credit Rules. 2. Shri Mayur Shroff (Advocate) appearing on behalf of the appellants argued that the main appellant is the manufacturer of, inter-alia, kraft paper from waste paper. That cenvat credit with respect to duty paid on the waste kraft paper received from M/s. Shah Pulp and Paper Mills Limited (SPPML, Vapi), was taken on the basis of proper duty paying documents. That appellant is not at all aware whether the processes of segregation of imported paper scrap .....

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010 during investigation clearly convey that 16% CENVAT shown by M/s. SPPML was actually CVD for which credit was taken as such waste kraft paper was not eligible to exemption from CVD under Notification No. 21/2002-Cus dated 01.3.2002. That both CVD and CENVAT were leviable at the rate of 16% ad-velorem. Learned Advocate relied upon the following case laws in support of his argument that CENVAT that credit can not be denied, at the time of taking credit when duty paid nature of the inputs was e .....

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p; Customs vs. MDS Switchgear Limited - [2008 (229) ELT 485 (SC)] It was also argued by the learned Advocate that for any improper duty paid by M/s. SPPML without appellant s knowledge, the appellant can not be denied CENVAT credit and extended period can not be invoked in the present proceedings. He made the Bench go through ground (h) of the appellant s grounds of appeal. 3. Shri J. Nair (AR) appearing on behalf of the Revenue argued that segregation of imported scrap does not amount to manufa .....

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s the case of the Revenue that such waste kraft paper was obtained by segregation of imported scrap and that the process of segregation of waste paper does not amount to manufacture. The crucial fact required to be seen is whether the main appellant should have enquired beyond the cenvatable document showing payment of duty that whether the inputs were due to the result of manufacture or not. It is observed from the case records that an assessee taking cenvat credit is not required to go beyond .....

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final product or in providing taxable service of the excise duty specified in First Schedule to the Excise Tariff Act. Insofar as the respondent is concerned, he had purchased the inputs and utilised the same for manufacture of a final product. Such goods were duty paid. Rules 3 and 4 of the Cenvat Credit Rules, 2004, thus would enable him to avail the Cenvat credit. It is a different thing that the supplier of the goods to the respondent paid excise duty on such product under mistaken belief. I .....

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wise fulfilled all conditions tor availing Cenvat credit thereof. 9. Case is substantially similar to one before the Supreme Court in case of MDS Switchgear Ltd. (supra). In the said case, the Tribunal while accepting the departments allegation of inflation of the value of intermediate goods to load the assessable value, observed that if the department was of the opinion that the value of the final product was depressed, it could have charged the original manufacturer unit in under-invoicing th .....

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l officers of the supplier unit cannot be contested or challenged by the officers in charge of recipient unit. 4.1 In the above case law also it is held that even if duty was not required to be paid by the manufacturer still credit can not be denied to the recipient when Revenue did not dispute the classification of such manufacture, accepted the duty so paid. It was also held that duty already determined by the jurisdictional officer of the supplier unit can not be contested or challenged by th .....

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reasons : Reasons given by the appellants for the alleged inflation of the value of the intermediate goods are logical. What was required of the Commissioner was to examine the quantum of the loading of the assessable value by the Modvat credit on the earlier inputs. That exercise has nowhere been done. If the department was of the opinion that the value of the final product was depressed, then they could have charged the Jalgaon unit with under-invoicing of their product. That has also not bee .....

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