2009 (5) TMI 714 - AT - Central Excise

Penalty - Cenvat/Modvat - Section 57-G(5) - use of chem ash in manufacture of final product - classification

Summary

Issues:
Appeal against order of Commissioner (Appeals) regarding denial of credit on various grounds.

Analysis:
1. The appellant, a sugar mill, procured capital goods, received components, spares, and accessories, and inputs. The original authority raised demands on various grounds, including non-usage of chem ash, missing declaration for defoamers, parts not falling under specified categories, missing mandatory declarations, and disputed credit reversal. The Commissioner (Appeals) upheld the denial and imposed penalties.

2. The appellant argued that chem ash was used in manufacturing, parts were for capital goods, and missing details were provided monthly. The disputed credit reversal was under protest, though not as per rules. The appellant conceded some demands but contested others based on previous tribunal decisions.

3. The Department contended that chem ash wasn't directly used in manufacturing and disputed the credit reversal. They cited a tribunal decision to support their stance.

4. The Tribunal found the appellant's debit in 1996 didn't follow protest procedures, making the suo motu credit invalid. However, demanding twice for the same amount was deemed improper. The penalty was reduced to Rs. 3 lacs. Some credits were confirmed as uncontested.

5. The Tribunal ruled that chem ash use was related to manufacturing and parts didn't need to fall under specific categories. The broad declaration of goods by the appellant was deemed sufficient, as they maintained proper records and submitted returns regularly.

6. The Tribunal confirmed some demands and penalties but set aside others, ultimately upholding a demand of Rs. 6,30,995/-, Rs. 1,269/-, and Rs. 7,596/-, with a penalty of Rs. 3 lacs. The rest of the demands and penalties were set aside.

Judgment:
The appeal was disposed of with the above terms.