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2003 (12) TMI 428 - AT - Central Excise
Issues:
1. Rejection of Cenvat credit availed on inputs used in the manufacture of exempted final product. 2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. Issue 1: Rejection of Cenvat Credit: The Commissioner of Central Excise rejected the Cenvat credit of Rs. 49,26,266.00 availed by the appellants on inputs used in the manufacture of a final product cleared at nil rate of duty. The appellants did not dispute the duty confirmation as the inputs were used in the production of an exempted final product. They acknowledged the duty liability and paid it even before the show cause notice was issued. The appellants argued that the penalty imposed, equivalent to the duty amount, was unjustified due to their status as a public sector undertaking without any intention to evade duty. They also highlighted that they had accepted to pay the duty raised after six months and had correctly reflected the nil rate of duty on the final product in their RT 12 return. Issue 2: Imposition of Penalty: The Revenue contended that there was a contravention of the law, justifying the penalty imposed by the Commissioner. The appellants did not contest the duty confirmation, leading to the confirmation of the reversal of Cenvat credit amount. However, considering that the entire duty was paid before the show cause notice, the Tribunal reduced the penalty from Rs. 49,26,266.00 to Rs. 1 lakh. The Tribunal upheld the penalty reduction but rejected the appeal on other grounds, disposing of the Stay Petition as well. In conclusion, the Tribunal confirmed the rejection of Cenvat credit on inputs used in the manufacture of an exempted final product but reduced the penalty amount imposed under Section 11AC of the Central Excise Act, 1944. The appellants' acknowledgment of duty liability, payment before the show cause notice, and their status as a public sector undertaking influenced the Tribunal's decision to lower the penalty amount, despite upholding the rejection of Cenvat credit.
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