Custom, Excise & Service Tax Tribunal
Cce, Chennai Iii vs M/S. Indian Steel And Allied Products on 11 September, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/373/2006
(Arising out of Order-in-Appeal 02/2006 (M-I) (D) dated 31.01.2006 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature
Honble P.KARTHIKEYAN, Member (Technical).
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CCE, Chennai III : Appellant
Vs.
M/s. Indian Steel and Allied Products :Respondent
Appearance Shri N.J. Kumaresh, SDR, for the appellant Shri K. Balasubramanian, Adv., for the respondent CORAM Shri P. KARTHIKEYAN, Member (Technical) Date of hearing : 11.09.08 Date of decision : 11.09.08 Final ORDER No.________/2008 This is an appeal filed by the Revenue. Lower authorities dropped the proposal to disallow credit to the extent of Rs. 8,59,095/- taken by the respondent on the ground that the supplier had defaulted payment of duty for the related month. The facts of the case are that M/s. Indian Steel and Allied Products received inputs to manufacture its final products from M/s. Sowbhagya Steels Ltd., Gummidipoondi, during November, 2002 under cover of 26 invoices. It transpired in enquiries conducted by the departmental authorities that the inputs, namely steel billets covered by the above invoices had not suffered duty. The input credit taken on the strength of the above mentioned 26 invoices worked out to Rs. 8,59,095/-. The original authority dropped the proposal to disallow and demand the impugned credit from the respondent on the ground that they were a bonafide buyer of the inputs and that as per the Circular No.766/82/2003-CX dated 15.12.2003 issued by the Board, action was not required to be taken to reverse/recover the cenvat credit availed in such cases where it was found that the supplier had not paid the duty after the close of the relevant month of supply. In the impugned order, the order of the original authority has been sustained relying on the same grounds and the Boards Circular.
2. The appeal filed by the revenue is on the basis that the respondent had not taken reasonable steps to ensure that it received only duty paid inputs. This was a requirement laid down in Rule 7 (2) of Cenvat Credit Rules 2002, to avail the input credit. In the instant case, the department was not in a position to recover the duty short paid by the supplier- manufacturer as it had become a sick unit and the department had approached the Debt Recovery Tribunal to recover the amounts due from them. The Government did not receive duty due on the inputs from the manufacturer and also an equal amount on the final products of the respondents as it availed credit of duty not paid.
3. The Ld. Counsel relies on a decision of this Tribunal in the case of CCE Vs. SPIC Pharmaceuticals Division 2006 (199) ELT 686 (Tri.-Chen.) as well as the Boards Circular No.766/82/2003-CX dated 15.12.2003, both of which support the decision of the lower authorities. He prays that the appeal filed by the revenue be dismissed. Ld. SDR reiterated the grounds taken in the appeal filed by the revenue.
4. I have carefully considered the facts of the case and the rival submissions. In the Circular relied upon by the original authority and the first appellate authority it was clarified that when the transactions of the user of the inputs were genuine and the bonafide nature of the same is not disputed, action should not be taken to recover cenvat credit availed by such manufacturers on the ground that the supplier of the inputs had failed to discharge its monthly duty liability. In the case law relied on by the Ld. Counsel for the appellants, the Tribunal had held that when there was no dispute of the receipt of the inputs under invoices issued by the inputs supplier showing duty payment particulars, the credit of such duty could not be denied. In view of the case law and the Circular of the Board, I do not find any reason to interfere with the impugned order. The appeal filed by the revenue is dismissed.
(Dictated and pronounced in open Court) (P.KARTHIKEYAN) MEMBER (T) BB ??
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