2010 (10) TMI 1032 - AT - Central Excise

Summary

Issues involved:
The issue involves the availing of CENVAT Credit by the Appellant for the clearance of furnace oil under the "Served from India Scheme" without payment of duty, leading to a dispute regarding the entitlement to CENVAT Credit and the obligation to pay an amount under Rule 6(1) of CENVAT Credit Rules, 2004.

Summary:

Issue 1: Availment of CENVAT Credit for clearance under "Served from India Scheme"

The Appellants cleared furnace oil to M/s Essar Shipping Ltd. without payment of duty under the "Served from India Scheme." The Revenue contended that as the furnace oil was supplied under exemption, the Appellant was not entitled to avail CENVAT Credit for the input used in manufacturing exempted products. Due to the lack of separate accounts as required by Rule 6(2) of CENVAT Credit Rules, 2004, the Appellant was obligated to pay an amount equal to 10% of the total price of the exempted goods.

Issue 2: Proceedings and Orders

Proceedings were initiated against the Appellant through a Show Cause Notice proposing the recovery of CENVAT Credit and imposition of penalties. The Additional Commissioner passed an order confirming the demand, interest, and penalty. The Commissioner (Appeals) upheld the decision but set aside the penalty due to non-utilization of the wrongly availed CENVAT Credit. The Appellant appealed against this order.

Issue 3: Tribunal's Decision

The Tribunal referred to a previous decision in the case of M/s Universal Power Transformer Pvt. Ltd. v. CCE Bangalore, which held that clearance of goods under the SFIS plan at a Nil rate of duty did not amount to exemption from duty payment. Therefore, there was no liability on the Assessee to pay 10% under Rule 6(3)(b) of CENVAT Credit Rules, 2004. The Tribunal also cited a precedent case to support this decision. Based on the established law, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, disposing of the Stay Petition.