2006 (6) TMI 336 - AT - Central Excise

Summary

Issues:
- Dispute over availing credit of duty paid on inputs for exported goods.
- Quantity of granules used in the manufacture of exported goods in question.
- Imposition of penalty for non-reversal of credit on inputs used in exported goods.

Analysis:
1. The appellants appealed against the Order-in-appeal passed by the Commissioner (Appeals) regarding the credit of duty paid on inputs used in the manufacture of goods cleared for export.

2. The dispute arose when the Revenue found that the appellants were using inputs for exported goods on which credit had been taken for duty paid. The appellants claimed that a lesser quantity of granules was used in the manufacture of exported goods than what was recorded, seeking credit for the remaining quantity.

3. The Revenue demanded the reversal of credit for inputs used in exported goods, which the appellants did not dispute. However, they contested the quantity of granules used and claimed credit for the difference. The Adjudicating Authority confirmed the demand but reduced the penalty imposed.

4. The appellants argued that they were entitled to credit for inputs used in goods cleared on payment of duty, emphasizing that they were not disputing the demand for other inputs used in exported goods. They maintained that there was no intention to evade duty payment.

5. The Revenue contended that as per exemption notification, manufacturers availing drawback for exported goods were not entitled to credit for inputs used in those goods. The dispute centered on the quantity of inputs used in the manufacture of exported goods.

6. The Tribunal found that the appellants had not availed credit for the full quantity of granules used in the manufacture of exported goods, as per their separate records. The demand for credit reversal was upheld, but the penalty was set aside due to the lack of mala fide intent.

7. Ultimately, the Tribunal disposed of the appeal, upholding the demand for credit reversal on inputs used in exported goods but setting aside the penalty, considering the circumstances of the case and the appellants' separate record-keeping.