2006 (7) TMI 508 - AT - Central Excise

Summary

Issues:
1. Compliance with Central Excise Notification No. 6/2002 regarding duty exemption for 'Tippers.'
2. Denial of benefit under the Notification due to non-compliance with conditions.
3. Demand of duty and penalties imposed by the Commissioner of Central Excise.
4. Appropriation of amount paid by the assessee towards the duty demand.
5. Claim for Cenvat credit on duty paid chassis.
6. Remand of the case for a fresh decision by the Commissioner.

Compliance with Central Excise Notification:
The appellants manufactured 'Tippers' claiming duty exemption under S.No. 212 of Central Excise Notification No. 6/2002. The Department alleged non-compliance with condition No. 52 of the Notification, leading to the denial of the exemption benefit. Show-cause notices were issued, demanding over Rs. 74 lakhs in duty for the period in question. The Commissioner confirmed the duty demand and imposed penalties under Rule 25 of the Central Excise Rules, 2002.

Appropriation of Amount and Cenvat Credit Claim:
The motor vehicles in question were made from duty-paid chassis and inputs. The appellants did not take Cenvat credit on the chassis but claimed credit on other inputs. They paid 8% of the vehicle price under Rule 6 of the CENVAT Credit Rules, which was then used by the Commissioner to offset the duty demand. The appellants argued that the amount appropriated exceeded Rs. 37 lakhs, making the payable differential amount about Rs. 37 lakhs. They contended that if this amount is paid, they should be eligible for Cenvat credit on the chassis, a claim previously made but not considered by the Commissioner.

Remand for Fresh Decision:
The Tribunal decided to remand the case to the Commissioner for a fresh decision considering the appellants' claim for input duty credit on chassis without exemption for the final product under the Notification. The impugned order was set aside, and the Commissioner was directed to issue a new order after providing the appellants with a fair opportunity to present their case.

Conclusion:
Both appeals were allowed by way of remand, emphasizing the need for a reevaluation of the Cenvat credit claim on chassis and a fresh decision by the Commissioner.