2009 (2) TMI 684 - AT - Central Excise

Summary

The Appellate Tribunal CESTAT, New Delhi heard two appeals, E/4412/04 by M/s RLF India Limited and E/4398/04 by the Commissioner of Central Excise, Delhi-III, against the same order-in-appeal. The Appellant, a manufacturer of embroidery fabrics, were availing of a compounded scheme for duty payment. The issue arose when they took capital goods Cenvat credit and used it to pay duty. A subsequent rule change disallowed this credit. The duty demand of Rs. 16,56,000 was confirmed by the Commissioner, who also imposed a penalty. The Appellant challenged the duty demand, while the Respondent challenged the penalty reduction.

The Appellant argued that they were eligible for the credit before the rule change and that the notice was time-barred. The Departmental Representative contended that the rule change was clarificatory and that the Tribunal had previously ruled against the Appellant. The Tribunal upheld the duty demand, stating that the App's use of the credit was incorrect. The notice was deemed timely. The penalty was held to be correctly restricted to Rs. 2,000 under the relevant rules. Consequently, the impugned order was upheld, and both appeals were dismissed.