The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed excise duty demand as there was no recovery of credit from the first stage dealer.
Alleging that the said additional customs duty passed irregularly being not admissible, show cause notice was issued to the appellant on 14.01.2008 for recovery of the said credit under Rule 12 of Cenvat Credit Rules, 2002/ Rule 14 of Cenvat Credit Rules, 2004 along with interest and proposal for penalty.
On adjudication, the demand was confirmed with interest and penalty and the amount paid during the course of investigation has been appropriated. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (Appeals), who in turn upheld the order of the adjudicating authority and rejected their appeal. Hence, the present appeal.
The counsel for the appellant contended that the recovery of the credit wrongly passed on by the appellant being first stage dealer/importer proposed to be recovered under Rule 12 of Cenvat Credit Rules, 2002/ Rule 14 of Cenvat Credit Rules, 2004 and confirmed in the impugned order is contrary to law as the said provisions are applicable for recovery of credit only from the manufacturers and not from the dealers. He has submitted that this principle has been settled by this Tribunal in the case of CCE vs. Shivam Corporation.
A Two-Member comprising DM Misra, Judicial Member and R Bhagya Devi, Technical Member observed that “We find that the purchasers, who have received the invoices, categorically denied availment/utilization of Cenvat Credit during the relevant period even though it was passed on to them in dealer’s invoice. Necessary evidences have been annexed to the Appeal paper-book. No contrary evidence has been placed by the Revenue to rebut the same. Thus, recovery of credit from the first stage dealer/importer-appellant as confirmed in the impugned order, cannot be sustained. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.”
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