2005 (11) TMI 292 - AT - Central Excise

Summary

Issues:
1. Denial of Cenvat credit on Molasses used for manufacturing dutiable products.
2. Applicability of Rule 7 of the Cenvat Credit Rules regarding availing credit on manufacturer's own invoice.

Analysis:
1. The appellant filed a stay application against the Order-in-Original denying Cenvat credit on Molasses used for manufacturing Rectified Spirit, Denatured Spirit, and Ethenol. The Commissioner invoked Rule 12 of the Cenvat Credit Rules, 2002, for recovery of the credit and imposed a penalty under Rule 13(1) based on Circular No. 615/6/2002-CX. The Tribunal noted that the appellants reversed the credit for Molasses used in Rectified Spirit and paid duty on the Molasses. The Tribunal found no revenue loss and granted a full waiver of pre-deposit of duty and penalty until the appeal's disposal.

2. The Tribunal examined the plea of the appellants under Rule 6 of the Cenvat Credit Rules to reverse the credit for Molasses used in Rectified Spirit. The Adjudicating Authority had held that availing credit on the manufacturer's own invoice was not permissible under Rule 7. The Tribunal disagreed, stating that Rule 7 does not prohibit availing Modvat credit on the appellant's own invoice, especially when duty has been paid. Since the appellants had paid duty on the Molasses and reversed the credit for exempted products, the Tribunal found no revenue loss and allowed a full waiver of pre-deposit of duty and penalty. The stay application was disposed of, with no recovery until the appeal's disposal.