Order Date – 21 July 2023

Parties: C.C.E. & S.T.-Vapi & C.C.E. & S.T.-Daman Vs Kris Flexipacks Pvt Ltd

Facts – 

• The Respondent, Kris Flexipacks Pvt Ltd, was sanctioned Cenvat credit in respect of Excise Duty paid on capital goods namely ‘Engraved Ms Copper Plated Rollers’, which were exempted from payment of Central Excise Duty under Notification No. 49/2006-CE dated 30.12.2006 by the Learned Commissioner (Appeals).
• The department was of view that since the said Capital Goods were exempted from payment of Excise Duty under an unconditional Notification, the supplier was not supposed to pay the duty, whatever duty was paid cannot be treated as Excise Duty in terms of Section 3 of Central Excise Act,1944. Consequently, the respondent cannot take credit of any amount which is not a payment of duty in terms of Section 3, the department also placed reliance on the Circular No. 940/01/2011-CX dated 14.01.2011.

Issue – 

• Whether the respondent is entitled to Cenvat credit on capital goods which were exempted from payment of duty?

Order – 

• The Tribunal observed that if the assessment at the supplier’s end has been accepted and no objection was raised, the same cannot be disputed at the recipient of goods for availment of Cenvat credit by the recipient. Since, the payment of duty has been assessed and the same was not challenged the duty was paid by the supplier is in terms of Section 3 of Central Excise Act, 1944 and this duty is clearly, legally available as Cenvat credit to the recipient.
• There are many judgments passed on this issue, which is directly on the issue in hand. According to which, even though the payment of duty is disputed, unless and until, any action for challenging the assessment of the supplier is taken, Cenvat Credit at the recipient end cannot be disputed, on the ground that the supplier was not supposed to pay duty, may be for various reasons that either the goods is not amount to manufacture, or exempted etc.
• Thus, the Learned Commissioner (Appeals) has rightly allowed the Cenvat credit on capital goods to the respondent. Hence, the order of the Learned Commissioner is absolutely legal and correct, which does not require any interference. Accordingly, the same is upheld.
• Revenue’s appeals are dismissed.

#Central excise act