TMI Blog2024 (2) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pting higher value determined under Section 4A of the said Act in respect of the Mosquito Repellent Refills cleared by them on stock transfer to their own unit in Puducherry which were ultimately delivered to the job worker. According to department, M/s.GCPL at Guwahati, instead of adopting the correct value to be determined under Section 4 of Central Excise Act, 1944 read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, with intent to obtain erroneous refund under Notification No.20/2007-CE, had undervalued the goods by adopting valuation under Section 4A and evaded duty. A Show Cause Notice dated 03-04-2013 was issued by the Commissioner of Central Excise, Guwahati to the units of M/s.GCPL at Guwahati by alleging suppression of facts to demand a sum of Rs.2,76,53,587/-, being erroneous refund relating to the period from March 2008 to December 2012 under proviso to Section 11A(1) Section 11A(4) along with interest under Section 11AA/11AB and to impose penalty under Section 11AC. 1.4 Consequently, it was noticed that the units of M/s.GCPL situated at North East (Guwahati) engaged in manufacturing Mosquito Repellant Refills cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing to recover the wrongly availed cenvat credit along with interest for the period from October 2008 to December 2012, and imposing penalties. After due process of law, the Original authority confirmed the demand along with interest and for imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 3. Ld. Counsel Ms. Manasa Srinivasan appeared and argued for the appellant. It is submitted by the learned counsel that the Impugned Order seeks to recover Cenvat credit validly availed by the appellant alleging that excess credit has been passed on to the appellant by Godrej Consumer Products Limited, Kalapahar, Guwahati (GCPL, Kalapahar) and Godrej Consumer Products Limited, Lokhra, Guwahati (GCPL, Lokhra) due to alleged overvaluation done by them in order to avail excess refund in terms of Area-based exemption under Notification No.20/2007-C.E. dated 25.04.2007. 3.1 The Appellant is a job-worker of Godrej Consumer Products Limited, Puducherry (GCPL, Puducherry). They are engaged in the manufacture of Combination Pack consisting of EMD, which is manufactured by the Appellant and refill bottles supplied by GCPL, Kalapahar and GCPL, Lokhra. The EMD is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which culminated in Order in Original No.03/2013-14 dated 18.12.2013. The demand was confirmed on the GCPL Guwahati units on the ground that the refill bottles are assessable to Excise duty based on value determined under Rule 8 of the Central Excise Valuation Rules, 2000 (110% cost value) and not under Section 4A of the Excise Act. It was held that GCPL had resorted to MRP valuation and paid excess duty with the intention to avail excess refund under the Area Based Exemption Notifications. It is pertinent to note that the OIO has not disputed that the refill bottles manufactured by GCPL are eligible for MRP based valuation under Section 4A of the Excise Act if sold to retail customers. 3.8 The demand confirmed vide OIO dated 18.12.2013 is tabulated hereinbelow: Period involved Amount of refund denied GCPL, Kalapahar March 2008 to March 2012 90,39,471 GCPL, Lokhra April 2008 to December 2012 1,86,14,116 Total 2,76,53,587 3.9 Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 877/15/2008-CX dated 17.11.2008 issued by the Board wherein it has been clarified that Rule 3 of the CCR allows credit of 'duty paid' by the manufacturer and not 'duty payable'. In light of the above, it is submitted that the Appellant is entitled to avail credit of duty paid and the Impugned Order merits to be set aside on this ground alone. 3.13 Without prejudice, the disallowance of credit, if at all correct, can only be to the extent of Rs.2,76,53,587/-being the amount held as erroneous refund at the supplier's end and not Rs.7,38,81,431 which is disallowed and confirmed in the Impugned Order. 3.14 The Impugned Order has confirmed reversal of Cenvat credit for the period between October 2008 to December 2012 and the Show Cause Notice is dated 06.11.2023. A substantial portion of the demand for the period up to October 2012 is confirmed under extended period. The Appellant submits that there is no suppression of facts or intention to evade payment of duty. The Appellant was under a bona fide belief that credit is eligible. During the disputed period, the Appellant had always disclosed the Cenvat credit A/c along with the monthly E.R.-1 Ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No.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. 8. As per Notification No.20/2007 dated 25.04.2007, the manufacturer of Mosquito Repellent Refills has to discharge all duties on final products and then claim refund. The notification grants exemption by way of refund. The units of GCPL, Guwahati have paid duty adopting transaction value as under Section 4A of Central Excise Act, 1994. The said duty has been passed on to the appellant, on which the appellant has availed credit. 9. At this juncture, Rule 12 of Cenvat Credit Rules, 2004 requires to be noticed, which reads as under : RULE 12. Special dispensation in respect of inputs manufactured in factories located in specified areas of North East region, Kutch district of Gujarat, State of Jammu and Kashmir and State of Sikkim. Notwithstanding anything contained in these rules, [but subject to the proviso to clause (i) of sub-rule (1) of Rule 3], where a manufacturer has cleared any inputs or capital goods, in terms of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The relevant para reads as under:- 4. A perusal of Section 57A(1) shows that the terminology used therein is paid and not payable . This distinction, in our opinion, is important because it indicates that we have to take into account the factual state of affairs. In other words, we have to consider whether the duty has actually been paid on the raw material and not whether duty was payable or not. In the present case, it is not in dispute that the assesses supplier in fact that paid the duty on the raw materials supplied to the assesse and the department accepted this excise duty. The concept of Modvat is that if the raw material suffered duty then relief should be given so far as the excise duty on the final product is concerned. For instance, if a manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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