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2006 (12) TMI 301 - AT - Central Excise
Issues:
1. Interpretation of Rule 3(6)(a) of Cenvat Credit Rules, 2001 regarding the restriction on Cenvat credit for inputs from 100% EOU. 2. Allegation of excess credit availed by the respondents and imposition of penalty by the Assistant Commissioner. 3. Appeal by the Revenue challenging the Commissioner (Appeals) decision to set aside the demand and penalty. Analysis: 1. The case involved a dispute over the interpretation of Rule 3(6)(a) of the Cenvat Credit Rules, 2001 concerning the restriction on Cenvat credit for inputs procured from a 100% EOU. The respondents, manufacturers of excisable goods, received inputs from a 100% EOU and availed credit based on the duty paid. The department alleged that excess credit was claimed, leading to a Show Cause Notice for recovery of the alleged amount. 2. The Assistant Commissioner imposed a penalty and directed the respondents to reverse the excess Cenvat credit amount. However, the Commissioner (Appeals) set aside the demand and penalty citing Rule 3(6)(a)(ii) of the Cenvat Credit Rules, 2001. The Revenue then appealed this decision, contesting the Commissioner (Appeals) ruling. 3. Upon hearing both sides, the judge noted that Rule 3(6)(a)(ii) of the 2001 Rules, applicable during the disputed period, restricted Cenvat credit to the additional duty leviable on like goods under the Customs Tariff Act, 1975. The judge found that the department erred in applying the rule incorrectly. The judge clarified the correct interpretation of the rule and concluded that the respondents had not availed any excess credit as per the admissible amount specified in the rule during the relevant period. In conclusion, the judge upheld the decision of the Commissioner (Appeals) and rejected the appeal by the Revenue, stating that there was no infirmity in the impugned order. The judgment clarified the correct application of Rule 3(6)(a)(ii) of the Cenvat Credit Rules, 2001 and resolved the dispute regarding the alleged excess credit availed by the respondents.
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