2007 (11) TMI 471 - AT - Central Excise

Summary

Issues involved:
1. Setting aside of the demand of duty in respect of Cenvat credit availed on capital goods before use.
2. Non-imposition of penalty on clearances of samples without payment of duty.

Analysis:

Issue 1: Setting aside of duty demand on Cenvat credit for capital goods
The appeal concerns the demand of duty on Cenvat credit availed by the respondent on capital goods before use. The Revenue argued that the ld. Commissioner (Appeals) erred in not considering the law's provisions on credit availment for capital goods. The Authorized Representative contended that the Cenvat Credit Rules, 2004, in force during credit availment, did not mandate capital goods to be in use, only in possession. The Tribunal found that Rule 4(2)(b) of the Cenvat Credit Rules, 2002, did not require capital goods to be in use, but only in possession, which the respondent complied with. Therefore, the appeal against this finding lacked merit, and the Tribunal upheld the Commissioner's decision.

Issue 2: Non-imposition of penalty on sample clearances
Regarding the non-imposition of penalty on clearances of samples without duty payment, the adjudicating authority determined that the samples were cleared for customer approval, in small quantities, and had no commercial value. Since the duty was paid along with interest before the show cause notice, no penalty was imposed. This decision was supported by the judgment of the Hon'ble High Court of Bombay in a relevant case. The Tribunal agreed with the lower authorities' findings and concluded that the non-imposition of penalty was justified. Consequently, the Tribunal rejected the Revenue's appeal. The cross-objections filed by the respondent in support of the impugned order were also disposed of.

In conclusion, the Tribunal upheld the Commissioner's decision on both issues, finding no grounds for interference. The appeal by the Revenue was rejected, and the cross-objections by the respondent were disposed of accordingly.