2009 (8) TMI 912 - AT - Central Excise

Summary

Issues:
Delay in filing the appeal, reversal of credit on molasses used in the manufacture of rectified spirit, duty demand for transferring molasses without permission, penalty imposition under Section 11AC and Rule 15, applicability of Rule 6(2) of Cenvat Credit Rules, interpretation of law and eligibility of Cenvat credit, dispute over the FIFO method, demand under Rule 8 of Cenvat Credit Rules, applicability of Rule 3(5) of Cenvat Credit Rules.

Analysis:
The judgment dealt with the condonation of a delay in filing an appeal due to the sickness of a key officer. The delay of 63 days was condoned, and the stay application was heard. The main issues revolved around two major demands: reversal of credit on molasses used in rectified spirit manufacturing and duty demand for transferring molasses without permission. The appellants maintained separate accounts for different categories of molasses as per Rule 6(2) of Cenvat Credit Rules, disputing the Revenue's FIFO method for credit reversal. The dispute also involved the applicability of Rule 8 of Cenvat Credit Rules regarding duty demand for storing molasses outside the factory without permission.

The tribunal considered the arguments regarding the interpretation of law, eligibility of Cenvat credit, and the disputed FIFO method. It found merit in the appellant's arguments concerning Rule 3(5) of Cenvat Credit Rules and the demand under Rule 8. Despite the time spent on adopting the FIFO method, no conclusive decision was reached. A prima facie case favored the appellants regarding the duty demand for contravening Rule 8, leading to a deposit of more than Rs. 26 lacs covering the duty amount. The tribunal allowed the stay application for the balance amount of duty demand, interest, and penalties during the appeal's pendency, disposing of the stay and COD applications accordingly.