2008 (8) TMI 654 - AT - Central Excise

Summary

Issues involved: Alleged wrongful utilization of Cenvat credit for payment of central excise duty on exempted goods and imposition of penalty u/s 11D of the Central Excise Act, 1944.

Summary:
The Appellants, engaged in manufacturing dutiable and exempted goods, were accused of wrongly using Cenvat credit for paying central excise duty on exempted goods to pass the benefit to consignees. The Adjudicating Authority confirmed the amount collected as central excise duty and imposed a penalty, upheld by the Commissioner (Appeals).

The Appellant contended that they availed Cenvat credit on Stainless Steel Scrap clearance, paid duty, and did not retain any amount, thus Section 11D should not apply. They argued that the amendment to Section 11D by the Finance Act, 2008, exempts those who pay duty collected from customers.

The Department reiterated that the duty paid on Aluminium Scrap, being nil rated, should be deposited in the Government Account u/s 11D. After considering both arguments and precedents, it was found that the Appellant paid duty on exempted goods, did not retain collected amounts, and thus Section 11D did not apply. Citing relevant case law, the Tribunal ruled in favor of the Appellant, setting aside the impugned order and allowing the appeal with consequential relief.