2008 (10) TMI 401 - AT - Central Excise

Summary

Issues involved: Recovery of Cenvat credit, imposition of penalty, non-maintenance of prescribed register, procedural violations, appeal by Revenue.

The Appellate Tribunal CESTAT, AHMEDABAD dealt with a case where the respondents, engaged in the manufacture of Kraft paper and paperboard, availed Cenvat credit during June 2001 to February 2005 based on their own invoices and invoices from customers for rejected finished goods. The original adjudicating authority ordered recovery of Rs. 9,22,378/- Cenvat credit along with penalties due to non-maintenance of prescribed register, failure to follow Rule 16, and non-compliance with trade notice 29/2005. The Commissioner (Appeals) set aside the original order, leading to the Revenue's appeal.

The Revenue contended that the appellants failed to inform the department about received goods, did not maintain necessary records, and did not follow the correct procedure. Despite the appellants incorporating details in their monthly returns, they could not provide specific records for the process related to returned goods. The Revenue justified the penalties and recovery, urging the setting aside of the Commissioner (Appeals) order.

Upon review, the Tribunal found that the trade notice issued on 12-12-2005 applied to assessees receiving duty paid goods without proper documents, and the respondents had provided details of rejected goods and their removal in monthly returns. The Tribunal agreed with the Commissioner (Appeals) that there was no procedural violation and that rectifiable procedural errors should not lead to denial of substantive benefits. It was also noted that the details in the RT-12/ER-1 were sufficient, indicating no suppression and precluding the application of the extended period. Consequently, the Tribunal rejected the Revenue's appeal, finding no merit or limitation issues in their case.

This judgment highlights the importance of maintaining proper records, following prescribed procedures, and ensuring compliance with trade notices to avoid penalties and recovery of credits in excise matters.