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28 Mar 2014

Credit allowed even if vendor has charged duty wrongly

Recently, the CESTAT, MUMBAI BENCH in the case of Commissioner of Central Excise, Aurangabad v. Komal Enterprises, (2014) 42 taxmann.com 566 (Mumbai - CESTAT) held that buyer is eligible to avail CENVAT Credit of duty charged by supplier irrespective of the fact that activity carried on by supplier does not amount to manufacture of goods.

The assessee in the cited case was engaged in manufacture of springs and press pans for which he procured S.S.Wires from supplier. The supplier has paid duty on such wires and the appellant took credit of the duty paid. Department argued that supplier's process of drawing wire from wire rods did not amount to manufacture and, therefore, no duty was payable by supplier and, accordingly, no credit could be taken by assessee. Honorable Tribunal held that the supplier issued CENVATable invoices and paid duty thus as per rule 9 of CENVAT Credit Rules, 2004, assessee was entitled credit of duty paid.