2009 (6) TMI 822 - AT - Central Excise

Summary

Issues:
1. Availing SSI Exemption benefit under notification No. 8/2003-C.E.
2. Liability for Cenvat credit on inputs after opting out of SSI Exemption.
3. Imposition of penalty for non-payment of duty.
4. Adjustment of the amount deposited against the demand.

Analysis:
1. The appellants opted for SSI Exemption benefit on 1-4-2005 but decided to opt out in 2006, paying the entire duty amount on 10-1-2006 and 13-3-2006. The issue arose regarding the denial of credit on stock as of 1-4-2005 due to opting out of SSI Exemption. The Advocate argued that if the duty demand is upheld, the deposited amount should be adjusted. It was emphasized that there was no intention to evade duty payment.

2. The Department relied on Rule 11(2) of Cenvat Credit Rules, 2004, which mandates payment equivalent to the Cenvat credit if a manufacturer opts out of exemption after availing it. The appellants voluntarily paid the duty without departmental permission. The Tribunal found the demand under Rule 11(2) justified since the appellants had availed SSI exemption in the financial year and made the payment without utilizing further Cenvat credit.

3. The Tribunal upheld the duty demand considering the circumstances but reduced the penalty to Rs. 25,000 due to the appellants being a small unit. The Advocate requested the deposited amount to be adjusted against the demand, which was directed by the Tribunal. The adjustment was to be done in accordance with the law, ensuring fairness in the resolution of the case.

4. In conclusion, the Tribunal upheld the duty demand based on the appellants' history of availing SSI Exemption and subsequent payment. The penalty was reduced, taking into account the nature of the appellant's business. The adjustment of the deposited amount against the demand was ordered, providing a balanced resolution to the case and ensuring compliance with legal provisions.