2007 (11) TMI 497 - AT - Central Excise

Summary

Issues:
1. Whether Cenvat credit can be availed at the pre-installation stage of capital goods and used for duty liability post-credit entry.
2. Restoration of appeal due to non-appearance at the hearing.
3. Eligibility for Cenvat credit prior to installation of capital goods.
4. Calculation of interest and penalty for wrong availment of credit.

Analysis:

Issue 1: Cenvat credit pre-installation and duty liability post-credit entry
The primary issue in this case was whether Cenvat credit could be availed at the pre-installation stage of capital goods and used for discharging duty liability pertaining to a date subsequent to the credit entry. The appellant argued for the allowance of credit even after installation, emphasizing the genuine difficulty faced due to non-appearance. The Tribunal recognized the appellant's genuine difficulty and allowed the restoration application to secure the end of justice. The Tribunal held that the appellant should not be denied credit from the date of installation for unquestionable eligibility and admissibility of the credit, compensating the revenue with interest for the credit availed pre-installation.

Issue 2: Restoration of appeal due to non-appearance
The appellant's non-appearance at the hearing due to genuine reasons beyond their control led to a restoration application. The Tribunal noted the absence of mala fides and deliberate failure on the part of the appellant, allowing the restoration application to prevent denial of justice. The Tribunal considered the appellant's vigilant approach towards exercising their right of appeal and granted restoration to ensure justice was not denied due to uncontrollable circumstances.

Issue 3: Eligibility for Cenvat credit pre-installation
The Tribunal found that the appellant was not ineligible for the Cenvat credit in question, and there was no demonstrated inadmissibility of such credit. The appellant was entitled to the credit from the date of installation of capital goods, as the only crucial factor was the date of installation for granting credit. The Tribunal directed the appellant to compensate the revenue with interest for the credit availed pre-installation, ensuring justice was served based on the admissibility and eligibility of the credit.

Issue 4: Calculation of interest and penalty
Regarding the wrong availment of credit, the Tribunal directed the appellant to deposit the penalty already directed by the Adjudicating Authority as a corrective measure. The appellant was required to compensate the revenue with interest calculated from the date of wrong credit availment till the date of capital goods installation, in accordance with the applicable rate of interest for default of duty payment. The Tribunal allowed the appeal, setting aside the impugned order and ensuring proper compensation for the revenue based on the circumstances of the case.