2009 (10) TMI 810 - AT - Central Excise

Summary

Issues involved: The issues involved in this case include non-payment of duty on work-in-progress (W.I.P.) stock by the respondents, alleged suppression of facts leading to evasion of excise duty, denial of Cenvat credit, imposition of penalty, and demand of interest.

Summary:

1. Non-Payment of Duty on W.I.P. Stock:
The respondents, a manufacturing unit, failed to pay duty on the raw material contained in the W.I.P. stock, which was detected by the preventive staff. The respondents admitted to this lapse and paid the due duty without protest.

2. Alleged Suppression of Facts:
The preventive staff issued a show cause notice alleging suppression of facts regarding the W.I.P. stock, leading to evasion of excise duty. The adjudicating authority confirmed the demand, disallowed Cenvat credit, imposed penalty, and charged interest.

3. Denial of Cenvat Credit:
The Commissioner (Appeals) allowed the appeal, setting aside the Order-in-Original, based on the argument that duty on work-in-progress was not payable upon conversion from an EOU unit to a DTA unit. The respondents argued that the duty paid was available as credit, negating any intent to evade payment.

4. Imposition of Penalty and Demand of Interest:
The Tribunal upheld the decision of the Commissioner (Appeals) stating that denial of credit under Rule 9(1)(b) of the Cenvat Credit Rules, 2002 was incorrect as there was no suppression of facts. Consequently, the imposition of penalty and demand of interest were deemed unnecessary.

In conclusion, the Tribunal rejected the appeal filed by the Revenue, upholding the decision of the Commissioner (Appeals) in favor of the respondents.