2009 (4) TMI 636 - AT - Central Excise

Summary

The Appellate Tribunal CESTAT, AHMEDABAD, consisting of Ms. Archana Wadhwa and Shri B.S.V. Murthy, JJ., heard a case 2009 (4) TMI 636 - CESTAT, AHMEDABAD. The case involved the appellants, engaged in the manufacture of bulk drugs and anesthetics, who had availed Cenvat credit on inputs used in manufacturing anesthetics that were fully exempt under Notification No. 4/2006 Serial No. 45. A demand of Rs. 15,59,256 was confirmed against the appellants for taking Cenvat credit on exempted products, with an additional penalty and interest imposed.

The advocate for the appellants argued that the issue was previously addressed by the Tribunal in similar cases, citing precedents where duty paid on final products was considered as reversal of credit. The Departmental Representative contended that after the amendment of Section 5A, the appellants had no choice but to pay duty on exempted goods and could not avail Cenvat credit. The Tribunal noted that the previous cases cited by the advocate were not directly applicable, as in those instances, duty had been paid on goods sold as such and not on manufactured goods. The Tribunal also observed that the appellants had not paid duty on the exempted products, and a significant portion of their manufactured goods were exported but not cleared on payment of duty.

Considering the facts and circumstances, the Tribunal directed the appellants to reverse credit of Rs. 7 lakhs from the Cenvat Account within four weeks and report compliance by a specified date. The pre-deposit of the remaining balance was waived, and recovery of the outstanding amount, interest, and penalty was stayed pending the appeal. The issue of refund eligibility for Cenvat credit was left for detailed consideration during the final hearing.