2008 (6) TMI 447 - AT - Central Excise

Summary

Issues:
1. Demand for Cenvat Credit attributable to work in progress while opting for SSI Exemption.
2. Time-barred demand for certain periods.
3. Allegations of suppression based on balance sheet.
4. Applicability of case laws and decisions.
5. Lapsing of Cenvat Credit and utilization.
6. Mis-declaration of work in progress to the department.
7. Offence and consequences for mis-declaration.
8. Evidence of work in progress and utilization of credit.
9. Applicability of previous decisions and rulings.
10. Imposition of penalty based on mis-declaration.

Analysis:
The appeals were filed against Orders-in-Appeal passed by the Commissioner of Central Excise, Bangalore-III Commissionerate, regarding the demand for Cenvat Credit attributable to work in progress while opting for SSI Exemption. The appellant, engaged in manufacturing Plastic Storage Tanks, argued that the demand for certain periods was time-barred and suppression cannot be alleged based on the balance sheet, citing relevant case laws like Kirloskar Oil Engines Ltd. v. CCE and Hindalco Industries Ltd. v. CCE. The appellant contended that there was no actual work in progress and the balance sheet only reflected a misleading picture for financial institutions, supported by decisions in Martin & Harris Laboratories Ltd. and Commissioner of Central Excise v. Universal Polythelene Industries.

The appellant further argued that as per Rule 9(2) of Cenvat Rules, 2002 and Rule 11(2) of the Cenvat Credit Rules, 2004, the credit automatically lapses and cannot be utilized, referring to precedents like Commissioner of Central Excise v. Nisma Aircon International Ltd. and Commissioner of Central Excise v. Shardha Castings (P) Ltd. The appellant relied on a previous decision in their own case where it was held that credit lapses at the end of the financial year, negating the demand for duty. The Departmental Representative contended that mis-declaration occurred when the appellant submitted a declaration of nil work in progress to avail SSI Exemption, while the balance sheet indicated otherwise, leading to an offence.

Upon careful consideration, the Tribunal found that there was no evidence of actual work in progress and the appellant's actions were to present a favorable financial picture. Citing the previous decision in the appellant's case, the Tribunal concluded that when credit lapses, there is no basis for demanding duty. Therefore, the demand for duties was set aside, leading to the dismissal of any penalty imposition. The decision was made following the ratio of the previous case, providing consequential relief to the appellant.