2007 (5) TMI 42 - AT - Central Excise

Demand - Two cases alleged against the appellant (i) Shortage of goods and also availed Cenvat credit on the inputs (ii) Cenvat credit on the stock lying on balance while surrendering registration nor reversed by appellant Held that allegation was correct and allow the appeal partly

Summary

Issues:
Appeal against Commissioner (Appeals) order upholding duty demand and penalty imposition under Section 11AC of Central Excise Act, 1944.

Analysis:
The appellant, a former Central Excise Law assessee, surrendered registration and started job work. Officers found goods shortage and un-reversed Cenvat credit during a visit. Original authority demanded duty on goods shortage, disallowed Cenvat credit, and imposed penalty under Section 11AC. Commissioner (Appeals) upheld the demand and penalty. The appellant argued that duty should have been demanded within the limitation period. The Department contended recovery for uncomplied Rule 9(2) provisions. The Tribunal noted Rule 9(2) uses "amount" not "duty," emphasizing credit utilization as duty payment. The appellant's failure to comply allowed recovery. Duty demand for shortages was accepted, but penalty under Section 11AC was set aside due to no proven clandestine removal. The appeal was partly allowed, setting aside the penalty and upholding the duty demand.