2008 (11) TMI 556 - AT - Central Excise

Summary

Issues: Appeal against Order-in-Appeal No. 311/2005-C.E. regarding applicability of Rule 6 of Cenvat Credit Rules for pig iron clearance without payment of duty.

Analysis:
1. Applicability of Rule 6 of Cenvat Credit Rules: The case revolved around the applicability of Rule 6 of the Cenvat Credit Rules to the clearance of pig iron without payment of duty based on CT3 certificates. The Commissioner (A) held that Rule 6 would not apply as the respondents could not predict the proportion of goods to be cleared under CT3 certificates during manufacture. The Commissioner (A) reasoned that the interest of revenue was safeguarded by requiring the respondents to reverse the credit in proportion to the pig iron cleared without payment of duty. This decision was supported by the judgment in Nicolas Piramal (India) Ltd. v. CCE, where it was established that reversing the credit for inputs used in exempted products eliminates the need for further reversal of 8% of the sale value of exempted products.

2. Revenue's Appeal: The revenue contested the Commissioner (A)'s decision, arguing that the Circular of the Board specified recovery of 8% of the amount for cases like this. The revenue claimed that the issue of recovering 8% of the price of exempted goods was ambiguous, especially for the period in question before 1-3-2002. However, the Appellate Tribunal found the revenue's appeal lacked merit as the Commissioner (A) had provided a well-reasoned order aligning with the Larger Bench's decision. The Tribunal noted that the reversal of credit adequately protected the revenue's interest, and there was no basis for imposing a penalty under Rule 13 of the Cenvat Credit Rules.

3. Decision and Dismissal of Appeal: After careful consideration, the Tribunal dismissed the revenue's appeal, stating that the Commissioner (A)'s order was well-founded and consistent with the Larger Bench's ruling. The Tribunal emphasized that the reversal of credit addressed the revenue's concerns, and there was no justification for interfering with the Commissioner (A)'s decision. Consequently, the revenue's appeal was rejected, affirming the Commissioner (A)'s order and upholding the principles outlined in the Cenvat Credit Rules and relevant judicial precedents.