2005 (4) TMI 363 - AT - Central Excise

Summary

Issues: Appeal against adjudication order-in-appeal confirming demand for credit on capital goods, penalty imposition, and machine confiscation.

Analysis:
1. Issue of Credit on Capital Goods: The appellant filed an appeal against the adjudication order confirming the demand for credit on capital goods. The appellant received capital goods in the relevant period and claimed credit as per the Cenvat Credit Rules. The Revenue objected to the appellant taking 100% credit in one financial year, leading to the reversal of 50% credit by the appellant. The appellant argued they were entitled to take 50% credit in the previous financial year but had not done so. The Tribunal found that the appellant had availed 100% credit in a financial year but reversed 50% upon objection. As per the rules, the appellant was allowed to take 50% credit in one financial year and the remaining in the subsequent year. Therefore, the Tribunal held that the demand for denying 50% credit was unsustainable and set it aside.

2. Penalty Imposition: The adjudicating authority had imposed penalties on M/s. Indian Oil Corporation Limited and the Deputy Manager (Finance) along with confirming the demand. However, since the Tribunal set aside the demand for denying 50% credit on capital goods, the consequential penalties were also set aside. The contention of the Revenue that the appellant violated the Cenvat Credit Rules by taking 100% credit in one financial year was not upheld by the Tribunal, leading to the reversal of penalties imposed.

3. Confiscation of Machine: The adjudicating authority had also ordered the confiscation of the machine in addition to confirming the demand and imposing penalties. However, since the Tribunal set aside the demand and penalties, the confiscation of the machine was no longer valid. The order for confiscation was based on the same grounds as the demand and penalties, which were found unsustainable by the Tribunal. Therefore, the order for confiscation was also set aside along with the demand and penalties.

In conclusion, the Tribunal found that the appellant was within their rights to avail of credit on capital goods as per the Cenvat Credit Rules, and the objection raised by the Revenue was not valid. The demand, penalties, and confiscation order were set aside as they were based on the incorrect interpretation of the rules regarding the availing of credit on capital goods.