Dear Professional Colleague,
We are sharing with you an important judgment of Hon’ble Punjab and Haryana High Court in the case of V.G. STEEL INDUSTRY Vs. COMMISSIONER OF CENTRAL EXCISE [2012 (27) S.T.R. 94 (P & H)] on the following issue:-
Issue: Whether Cenvat credit is available when excess duty is paid on inputs?
Facts: The assessee claimed Cenvat credit to the extent of duty paid on purchase of inputs. The same was disallowed on the ground that duty paid on purchase of inputs was in excess of duty due and the benefit could be admissible only to the extent of duty due. The order of Adjudicating Authority has been affirmed by the Commissioner (Appeals) as well as by the Tribunal. Hence, the appeal was made before the Hon’ble High Court.
The Appellant submitted that even when the duty has been paid in excess of the amount finally held to be payable, Cenvat credit cannot be denied unless the excess duty paid has been refunded. The assessee could very well claim the Cenvat credit as the department could not get the duty twice and reliance was made upon the following cases:
- Commissioner Central Excise, Chandigarh Vs. M/s Guwahati Carbons Ltd [2010-TIOL-609-HC-P&H-CX].
- CCE Vs. Ranbaxy Labs Ltd. [2006-TIOL-438-HC-P&H-CX]
The Department contended that the law on the point that the manufacturer can avail the Cenvat Credit only to the extent of the duty paid on the inputs purchased is well settled. In the absence of the inputs being subjected to duty payment question of availing Cenvat credit by the manufacturer procuring such inputs does not arise. Once the authorities had held that the supplier of the inputs was not subjected to the duty payment, question of appellants seeking to avail Cenvat credit in respect of inputs so supplied by the supplier cannot arise.
Further, it was contended that even if the assessee had paid the duty wrongly or by mistake, that would only entitle the supplier to seek refund of such amount. But that by itself cannot create any right in favour of the appellants who had procured such duty free inputs. Accordingly, no Cenvat Credit is available to the appellant.
Held: It was held that the assessee was entitled to the availment of Cenvat Credit. The Hon’ble High Court relied upon the judgments of the above case laws and held that even if the duty has been paid in excess of the amount finally held to be payable, unless the excess duty paid has been refunded, the assessee could claim Cenvat credit as the department could not get the duty twice. The respondent was unable to distinguish the applicability of the judgments relied upon on by the appellant. In view of above, the case was decided in favour of the assessee and the appeal was allowed.