2008 (11) TMI 574 - AT - Central Excise

Summary

Issues involved:
The issues involved in the case are the sustainment of demand for irregularly availed Cenvat credit and penalty on two plants of a company u/s Rule 14 of Cenvat Credit Rules, 2004.

Details of the Judgment:

Issue 1: Demand of Cenvat credit and penalty imposition
The original authority ordered recovery of irregularly availed Cenvat credit along with interest u/s Rule 14 of CCR, 2004 and imposed penalty u/s 11AC of the Central Excise Act. The Commissioner (Appeals) upheld this decision, stating that facility charges did not constitute an input as per CCR, 2004. The appellants argued that the facility charges were part of the assessable value of the consignments of liquid nitrogen received by them, citing a Tribunal decision. However, the Commissioner (Appeals) disagreed, relying on a different Tribunal decision. The appellants were found to have suppressed the fact of availing Cenvat credit against invoices for facility charges.

Issue 2: Applicability of Cenvat credit rules
The Tribunal held that the manufacturer was entitled to avail credit of the entire duty paid on inputs received, including duty on facility charges, as the supplier had discharged duty on those charges. The Tribunal referred to a previous case where facility charges were considered additional consideration collected by the supplier to offset cost escalation. The Tribunal found that the appellants had correctly taken credit on supplementary invoices, leading to the conclusion that the demand for Cenvat credit recovery and penalties was not sustainable. The appeals were allowed, and the impugned order was set aside.

In conclusion, the Tribunal ruled in favor of the appellants, allowing their appeals and setting aside the order for recovery of Cenvat credit and penalties.