2009 (4) TMI 621 - AT - Central Excise

Summary

Issues Involved:
Demand of central excise duty on automobile parts, non-payment of duty on clearances, demand of duty on free supply of tools, imposition of penalty under Section 11AC of the Central Excise Act, waiver of predeposit and stay of recovery of demands, eligibility to use Cenvat credit, confirmation of demands by the Commissioner, utilization of Cenvat credit to discharge duty liability, sustainability of the demand of duty, imposition of penalties, prima facie case against penalties, complete waiver of demands and penalties, stay of recovery pending decision.

Analysis:

1. Demand of Central Excise Duty and Penalty:
The impugned order demanded central excise duty on clearances of automobile parts and on free supply of tools, along with applicable interest and a penalty under Section 11AC of the Central Excise Act. The appellants sought waiver of predeposit and stay of recovery of these demands. The Tribunal found that the appellants had manufactured and cleared automotive components without payment of duty but had received inputs and capital goods involving Cenvat credit. The Commissioner confirmed the demands but did not allow adjustment of the Cenvat credit earned by the appellants. However, the Tribunal held that the appellants were eligible to utilize the Cenvat credit to discharge the duty liability, which was much in excess of the duty found to have been not paid. Consequently, the Tribunal found the demand of duty not sustainable and ordered complete waiver of the demands and penalties imposed.

2. Prima Facie Case Against Penalties:
The Tribunal noted that the appellants had made out a prima facie case against the penalties imposed on them. Considering that the Cenvat credit earned was significantly higher than the duty found to have been not paid, the Tribunal held that the penalties were not justified. As a result, the Tribunal ordered complete waiver of the penalties adjudged against the appellants and stayed the recovery pending decision in the appeals.

This detailed analysis of the judgment highlights the issues of demand of central excise duty, eligibility to use Cenvat credit, sustainability of the demand of duty, imposition of penalties, and the Tribunal's decision to grant complete waiver of demands and penalties, as well as stay of recovery pending further proceedings.