2009 (1) TMI 731 - AT - Central Excise

Summary

Issues:
1. Calculation of Cenvat credit availed on raw materials.
2. Application of FIFO method for duty calculations.
3. Challenge to the order of Commissioner (Appeals) by Revenue.

Analysis:
1. The case involves a dispute regarding the calculation of Cenvat credit availed on raw materials by a unit engaged in garment manufacturing. The unit had procured a significant quantity of raw material and availed Cenvat credit amounting to Rs. 94,35,802. However, discrepancies were noted in the clearance of a portion of the raw material, leading to a show cause notice being issued for not reversing the credit of duty availed as required by Rule 3(4) of the Cenvat Credit Rules, 2002. The notice demanded a differential Central Excise duty, interest on delayed payment, and imposed a penalty on the unit.

2. The show cause notice was adjudicated by the Deputy Commissioner, who upheld the demand for duty, interest, and penalty. The unit then appealed to the Commissioner (Appeals), who, after considering the arguments, accepted the unit's contention regarding the application of the FIFO method for calculating duty liability. The Commissioner recalculated the Cenvat credit payable by the unit and found that there was no case of short payment. Consequently, the penalty and interest demand were set aside in the Order-in-Appeal.

3. The Revenue challenged the Commissioner's order, arguing that the FIFO calculations should have started from December 2003 instead of January 2004. Upon review, the appellate authority found the Commissioner's order to be well-reasoned, considering all facts and calculations. The appellate tribunal, after a detailed analysis, upheld the Commissioner's decision, stating that the starting month for FIFO calculations was correctly determined. Consequently, the Revenue's appeal was rejected, affirming the Order-in-Appeal issued by the Commissioner.

This comprehensive analysis outlines the issues related to the calculation of Cenvat credit, the application of the FIFO method for duty calculations, and the challenge to the Commissioner's order by the Revenue, providing a detailed understanding of the legal judgment delivered by the appellate tribunal.