CENVAT Credit can not be denied on the ground that input was not liable to duty

CENVAT Credit can not be denied on the ground that input was not liable to excise duty when the supplier wrongly paid the duty

In a recent judgment, Bombay High Court has held that CENVAT Credit can not be denied on the ground that such input was not liable to excise duty when the supplier from whom the assessee had purchased goods had wrongly paid the duty although goods were exempted and no duty was required to be paid by the supplier.

ABCAUS Case Law Citation:
4378 (2025) (01) abcaus.in HC

In the instant case, the Revenue had filed this appeal under Section 35G of the Central Excise Act, 1944 (the Act) challenging the order passed by the CESTAT (Tribunal).

The issue involved in the instant appeal, as per the Revenue, was whether CENVAT Credit can be denied to the respondent assessee on the ground that such input were not liable to the excise duty although the supplier from whom assessee had purchased those goods had wrongly paid the duty, since these goods were exempted and no duty was required to be paid by the supplier.

The Hon’ble High Court observed that the Tribunal in its order had given a finding that there was no evidence on record that the payment of duty by the supplier was questioned / challenged / disputed by their jurisdictional supplier was questioned / challenged / disputed by their jurisdictional officer and since the payment of duty by the supplier was found to be legal and correct, the assessee cannot be denied benefit of CENVAT credit.

The Hon’ble High Court observed that the Revenue had not challenged the finding of fact as incorrect. Therefore, findings being not challenged and the question being a finding of fact rendered by the final fact finding authority, no substantial questions of law can be said to arise from the impugned order.

Further, the Hon’ble High Court noted that Tribunal in the impugned order followed the decision of the Court and nothing was brought to the notice of the Court that the decision of the Tribunal has been challenged by the Appellant-Revenue before the higher forum. Therefore, even on this, count, no substantial questions of law would arise.

The Hon’ble High Court further noted that the Tribunal had relied upon the decision of the Gujarat High Court, Madras High Court and Punjab and Haryana High Court and same had not been shown to be incorrect or having challenged before the Supreme Court. The Tribunal based on these decisions had stated that it is settled by various High Courts and the Tribunal that even if excise duty is not payable on the product for any reason, but the Assessee has paid the excise duty and said payment is not challenged or questioned then no excise duty and said payment is not challenged or questioned then no question can be raised as regards availment of the credit by the recipients of goods. The Tribunal has applied these judgments since the recipients of goods. The Tribunal had applied these judgments since the facts were identical and no perversity was shown by the appellant Revenue.

Accordingly, the appeal of the Revenue was dismissed.

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