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3 Dec 2013

CENVAT Credit is allowable to the assessee even if the supplier had not discharged its duty

ecently, in case of Commissioner of Central Excise, Jalandhar Vs. Kay Kay Industries, (2013) 38 taxmann.com 336 (SC), Hon’ble Supreme Court held that if a supplier of material has not discharged its Excise Duty liability, the assessee cannot be denied CENVAT Credit factualizing the provisions of Section 57A(6) of Central Excise Act, 1944.

The facts of the case are that the appellant was denied the right to claim CENVAT Credit on the invoices issued by supplier of inputs on the grounds that the supplier had not paid the Excise Duty on the goods manufactured and supplied by it. The provisions of Section 57A(6) of Central Excise Act, 1944 were invoked which provides an assessee to take reasonable steps to confirm that the supplier has paid the duty.

Hon’ble Supreme Court in the cited case judged upon that “Reasonable Care” as cited in the section does not mean that an assessee is required to confirm from department about payment of duty. Thus, CENVAT Credit was allowed to the appellant.