2008 (6) TMI 395 - AT - Central Excise

Summary

Issues:
- Appeal against order setting aside demand and penalty on the ground of limitation.
- Admissibility of credit on capital goods not received in the factory.
- Invocation of extended period under Section 11AC.
- Comparison of judgments regarding admissibility of credit without receipt of goods.

Analysis:

The appeal was filed by the Revenue against the order of the Commissioner (Appeals) that set aside the demand of Rs. 3,84,000/- and an equal amount of penalty under Section 11AC due to limitation. The case involved the respondents taking credit of duty paid on capital goods from April 2003 to March 2004, which were not received in their factory. The Department issued a show cause notice in 2006 invoking the extended period under Section 11AC, leading to the adjudication order and the subsequent appeal.

The Revenue argued that the capital goods were never received in the factory, and the credit was taken solely based on an invoice without any proof of dispatch to the supplier. They contended that the extended period was rightly invoked due to the lack of proof of receipt and non-compliance with procedural requirements. On the other hand, the respondents cited a Tribunal decision regarding duty paid by a job worker, emphasizing the admissibility of such credit.

After considering the submissions, the Tribunal noted that the capital goods had been with the job worker since 1980 when credit on duty paid was not admissible as Cenvat credit. The Tribunal found that the issue arose from the procedural irregularity of the respondents choosing to take credit without transferring the goods as per procedure. It was acknowledged that the capital goods were used by the job worker for the respondents, making them eligible to transfer the same. The Tribunal held that the stand of the Commissioner (Appeals) on not invoking the extended period was correct, and the Tribunal's previous decision on duty paid by a job worker was applicable to the case.

Ultimately, the Tribunal rejected the appeal filed by the Revenue, concluding that on both merits and limitation, the Department's appeal failed. The judgment highlighted the importance of following procedural requirements for the admissibility of credit on capital goods and emphasized the specific circumstances of the case that led to the rejection of the Revenue's appeal.