The main legal point established in the judgment is that once the duty is paid and the invoice is issued, the purchaser is entitled to take the credit, and there was no loss to the revenue. The interpretation of Rule 3 of the Cenvat Credit Rules, 2004, and the application of relevant circulars and judgments were crucial in reaching the decision.

ORDER

1. Present appeal under Section 35G of the Central Excise Act, 1944, is filed by the Revenue against the final order dated 21.02.2019 passed by the learned Customs, Excise and Service Tax Appellate Tribunal, (for short, ’CESTAT’) Principal Bench, West Block No. 2, R. K. Puram, New Delhi-110066, which was filed against the order in Original No. ALW-EXCIS-000-COM-029-17-18 dated 22.12.2017, passed by the Commissioner of the Central Excise and Service Tax, Alwar.

2. Present appeal is filed on the following substantial questions of law:-

"1. Whether CENVAT Credit can be allowed to the downstream unit i.e. assessee, as amount excess paid by the supplier of goods cannot be termed as duty under Rule 3 of the Cenvat Credit Rules, 2004? and;

2. Any other question of law as the Hon’ble Court may formulate in the facts and circumstances of the case."

3. It is submitted by the counsel for the Revenue that on 21.09.2014, for the period from September, 2012 to July, 2015, a show cause notice was issued for wrongly availing and utilizing CENVAT Credit amounting to Rs. 3,01,32,736/- in contravention of provisions of Rule 3 of the CENVAT Credit Rules, 2004 (for short, ’Rules of 2004’) which were demanded under the provisions of Rule 14 of the Rules of 2004 read with Section 11A(4) of the Central Excise Act, 1944 under the extended period of limitation on the grounds of evasion of central excise duty on suppression, concealment and misleading, referred to in Para 10 of the show cause notice.

4. It was submitted by the standing counsel thatmanufacturing unit of M/s Tata BlueScope Steel Ltd., Jamshedpur, Jharkhand, is engaged in manufacturing of profile sheets which is one of the raw material for the manufacturing of items by the respondent, who is registered at RIICO Industrial Area, Chopanki, Bhiwadi, Alwar (Rajasthan) and is a downstream unit. It was further submitted that Central Excise duty paid on the inputs by Jamshedpur unit was availed as CENVAT Credit by the respondent. The allegation of revenue is that the Jamshedpur unit paid Central Excise duty in excess of what they were required to pay and such excess excise duty paid was wrongly availed as CENVAT Credit by the respondent unit and therefore, the present show cause notice was issued. The excess duty payment was paid by Jamshedpur unit by including the value of outward transportation of the inputs from Jamshedpur unit to Bhiwadi unit. In terms of the Circular dated 14.01.2011 issued by CBEC, it has been clarified that if an assessee pays excess duty on exempted goods, the same is not allowed as the same cannot be termed as ’duty of excise’ under Rule 3 of the Rules of 2004.

5. Learned counsel further submitted that the learned CESTAT has wrongly placed reliance on the Hon’ble Apex Court judgment in the case of CCE Vs. MDS Switchgear Ltd. reported in (2008) 17 SCC 71 and the tribunal order in the case of Cipla Ltd. Vs. CCE reported in 2011 (273) ELT 391 (Tri.-Mumbai). The ratio recorded in para 8 of the impugned order was never ordered by the Hon’ble Apex Court.

6. He submitted that in the light of the provisions of Rule 3 of the Rules of 2004, Circular dated 14.01.2011 and wrong reference drawn on the judgment of Hon’ble Apex Court, the order dated 21.02.2019 passed by learned CESTAT should be set aside and the appeal be admitted on the framed substantial question of law.

7. We have analyzed memo of appeal, submissions made by the revenue counsel and the judgment cited at Bar. The issue in the present show cause notice is found on the basis of irregular availment of CENVAT Credit by the respondent on the premise that respondent has availed CENVAT Credit on the exempted/abated portion of the assessable value wherein duty was not required to be paid by manufacturing unit. In terms of revenue circular dated 14.01.2011, the same is not duty of excise.

8. On perusal of the order of learned CESTAT, it is beyond doubt that the respondent has paid duty of Central Excise under Rule 3 of the Rules