Case Note & Summary
The Appellant-Revenue filed an appeal under Section 35G of the Central Excise Act, 1944 against the order dated 20 October 2023 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Revenue proposed substantial questions of law regarding whether CENVAT credit taken by the Respondent-Assessee on 'Engraved Printing Cylinder' and 'Copper Engraved Cylinder' could be denied on the ground that these goods were unconditionally exempted from excise duty under Notification No.49/2006-C.E., and whether the duty paid by the supplier should be treated as a deposit under Section 11D of the Act. The Revenue also questioned whether the Tribunal erred in dropping the duty demand of Rs.2,04,41,446/- along with interest and penalties. At hearing, the Revenue pressed only the first two questions. The Tribunal had found that there was no evidence that the supplier's duty payment was questioned or challenged by the jurisdictional officer, and therefore the assessee could not be denied CENVAT credit. The Revenue did not challenge this finding of fact. The Tribunal also followed the decisions of the Bombay High Court in Commissioner of Central Excise vs. Nestle India Ltd. and its own decision in Commissioner of Central Excise, Customs and Service Tax vs. Kris Flexipacks Pvt. Ltd., which held that if duty is paid by the supplier and not challenged, the recipient is entitled to credit. The Revenue had not challenged the Kris Flexipacks decision before a higher forum. The High Court held that since the finding of fact was unchallenged and the Tribunal's reliance on settled law was not shown to be perverse, no substantial question of law arose. The appeal was dismissed.
Headnote
A) Central Excise - CENVAT Credit - Exempted Goods - Section 35G Central Excise Act, 1944 - CENVAT Credit Rules, 2004 - Whether CENVAT credit can be denied to recipient where supplier paid duty on exempted goods but such payment was not challenged by jurisdictional officer - Held that since the Revenue did not challenge the finding of fact that the supplier's duty payment was legal and correct, no substantial question of law arises; appeal dismissed (Paras 4-8).
B) Central Excise - CENVAT Credit - Precedent - Section 35G Central Excise Act, 1944 - Tribunal's reliance on decisions of various High Courts and this Court in Nestle India Ltd. and Kris Flexipacks Pvt. Ltd. - Held that where the Revenue has not challenged the Tribunal's order in Kris Flexipacks Pvt. Ltd., it cannot now contend that the same principle should not apply; no substantial question of law arises (Paras 5-6).
Issue of Consideration
Whether CENVAT Credit on 'Engraved Printing Cylinder' and 'Copper Engraved Cylinder' can be denied to the assessee on the ground that such cylinders were exempted from excise duty, although the supplier had wrongly paid duty which was not challenged by the jurisdictional officer.
Final Decision
Appeal dismissed. No substantial questions of law arise from the Tribunal's order dated 20 October 2023.
Law Points
- CENVAT credit cannot be denied to recipient if supplier has paid duty and such payment is not challenged by jurisdictional officer
- even if goods were exempted
- no substantial question of law arises from unchallenged findings of fact by Tribunal
Case Details
2024 LawText (BOM) (12) 2144
Central Excise Appeal No.46 of 2024
M. S. Sonak, Jitendra Jain
Karan Adik, Maya Majumdar for Appellant; Prakash Shah, Jas Sanghavi, Mohit Raval i/b. PDS Legal for Respondent
Commissioner of CGST & Central Excise, Daman Commissionerate
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Appeal by Revenue under Section 35G of Central Excise Act, 1944 against CESTAT order allowing CENVAT credit to assessee on exempted goods.
Remedy Sought
Revenue sought to set aside Tribunal's order and restore duty demand of Rs.2,04,41,446/- with interest and penalties.
Filing Reason
Revenue contended that CENVAT credit on 'Engraved Printing Cylinder' and 'Copper Engraved Cylinder' should be denied as goods were exempted and duty paid by supplier was not legally payable.
Previous Decisions
CESTAT by order dated 20 October 2023 allowed the assessee's appeal, dropping the duty demand, following decisions of Bombay High Court in Nestle India Ltd. and its own decision in Kris Flexipacks Pvt. Ltd.
Issues
Whether CENVAT credit on exempted goods can be denied to recipient where supplier paid duty and such payment was not challenged by jurisdictional officer.
Whether the Tribunal's order dropping duty demand of Rs.2,04,41,446/- was erroneous.
Whether substantial questions of law arise from unchallenged findings of fact.
Submissions/Arguments
Appellant-Revenue argued that CENVAT credit on exempted goods is not permissible and duty paid by supplier should be treated as deposit under Section 11D.
Respondent-Assessee relied on decisions of Bombay High Court in Nestle India Ltd. and Betts India Ltd., and Tribunal's decision in Kris Flexipacks Pvt. Ltd., contending that credit is allowable where supplier's duty payment is not challenged.
Ratio Decidendi
Where the supplier has paid excise duty on goods and such payment is not questioned or challenged by the jurisdictional officer, the recipient assessee cannot be denied CENVAT credit on the ground that the goods were exempted. Findings of fact by the Tribunal, if unchallenged, do not give rise to substantial questions of law under Section 35G of the Central Excise Act, 1944.
Judgment Excerpts
The Tribunal in paragraph 4 of its order has given a finding that there is no evidence on record that the payment of duty by the supplier was questioned / challenged / disputed by their jurisdictional officer and since the payment of duty by the supplier is found to be legal and correct, the Respondent-Assessee cannot be denied benefit of CENVAT credit.
Nothing has been brought to our notice that the decision of the Tribunal in the case of Kris Flexipacks Pvt. Ltd. (supra) has been challenged by the Appellant-Revenue before the higher forum.
In our view, for the reason stated above and following decisions of the Co-ordinate Benches of this Court, no substantial questions of law arise from the Tribunal's order dated 20 October 2023, and, therefore, the appeal of the Appellant-Revenue is dismissed.
Procedural History
The Appellant-Revenue filed an appeal under Section 35G of the Central Excise Act, 1944 before the Bombay High Court against the order dated 20 October 2023 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Tribunal had allowed the Respondent-Assessee's appeal and dropped the duty demand of Rs.2,04,41,446/-. The High Court heard the appeal on 18 December 2024 and pronounced judgment on 19 December 2024, dismissing the appeal.
Acts & Sections
- Central Excise Act, 1944: Section 35G, Section 11D
- CENVAT Credit Rules, 2004: Rule 3
