Commissioner CGST And Central Excise Daman vs. Huhtamaki Ppl LTD

Facts

The Appellant-Revenue filed an appeal against an order dated October 20, 2023, passed by the Tribunal. The appeal concerns the CENVAT credit taken by the Respondent-Assessee on "Engraved Printing Cylinder" and "Copper Engraved Cylinder." The Revenue's contention was that these items were unconditionally exempted from duty, and therefore, any duty paid by the supplier should not be treated as excise duty for availing CENVAT credit. The dispute involves a demand of Rs. 2,04,41,446/- for wrongly availed CENVAT credit, along with interest and penalties. The Tribunal had dropped the entire demand.

Held

The Court held that no substantial questions of law arise from the Tribunal's order. Firstly, the Tribunal found that there was no evidence that the supplier's payment of duty was questioned or disputed by their jurisdictional officer. Since the supplier's payment was considered legal and correct, the Respondent-Assessee could not be denied CENVAT credit. The Appellant-Revenue did not challenge this finding of fact. Secondly, the Tribunal followed the decisions of this 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 were not shown to have been challenged before a higher forum. The Tribunal also relied on decisions of other High Courts and its own precedents, establishing that if duty is paid and not questioned, credit cannot be denied to recipients. The Court found no perversity in the Tribunal's approach. Therefore, following co-ordinate benches of the Court and the stated reasons, the appeal was dismissed.

Key Issues

1. Whether CENVAT Credit taken by the Respondent on "Engraved Printing Cylinder" & "Copper Engraved Cylinder," which were fully exempted from duty vide Notification No.49/2006-C.E., dated 30.12.2006, will be treated as deposit in terms of Section 11D of the Central Excise Act, 1944, and duty so paid will not be treated as duty of excise for taking CENVAT credit in terms of Rule 3 of the CENVAT Credit Rules, 2004 or otherwise? 2. Whether the CESTAT erred in dropping the entire duty demand of wrongly/excessively availed CENVAT Credit to the tune of Rs.2,04,41,446/-, along with consequential interest and penalties? Contentions of the Appellant-Revenue: - The CENVAT credit should not be allowed on exempted goods, even if the supplier wrongly paid duty. Contentions of the Respondent-Assessee: - Relied on decisions of the High Court and Tribunal, including Commissioner of Central Excise vs. Nestle India Ltd. and Commissioner of Central Excise, Customs and Service Tax vs. Kris Flexipacks Pvt. Ltd. - Relied on decisions of the Gujarat High Court, Madras High Court, and Punjab and Haryana High Court, which held that if excise duty is paid on a product and this payment is not challenged, recipients cannot be denied credit. - Relied on the decision in The Commissioner of Central Excise vs. M/s Betts India Ltd., where a similar appeal by the Revenue was dismissed.