2015 (5) TMI 1093 - AT - Central Excise

Cenvat credit - Short receipt of inputs - Penalty - Rule 15(1) of Cenvat Credit Rules, 2004 - Time limitation - Held that - the conclusion is that Cenvat credit availed and utilized on short receipt of base oil in excess of 1% is not permissible - In our view the said limit is in accordance with the instruction issued by the Central Board of Excise and Customs on the subject. We also agree with the ld. AR that the limits will not be different in case of movement of goods which are duty paid or movement of goods which are non-duty paid. Such losses will not depend upon duty paid or non-duty paid nature of goods but will upon the inherent nature of the goods. We find that basic Excise duty without benefit is ₹ 9,39,250/- ES SHES. Amount confirmed is less than this amount. However, computation details are not given. Appellant may compute, after taking benefit of 0.1% permissible limit and pay the differential amount and interest. We also note that equal amount of penalty has been imposed under Rule 15(1) of Cenvat Credit Rules, 2004. Keeping in view the nature of the dispute and the fact that earlier department has allowed such losses; we do not consider it a fit case for imposition of penalty under Rule 15(1) of Cenvat Credit Rules, 2004, penalty imposed is therefore, set aside - Appeal disposed of.

Summary

Issues:
- Availment of Cenvat credit on short receipt of Base Oil
- Permissible limit for transit loss in case of Base Oil
- Applicability of prescribed limits to duty paid goods
- Imposition of penalty under Rule 15(1) of Cenvat Credit Rules

Analysis:

Issue 1: Availment of Cenvat credit on short receipt of Base Oil
The case involved the appellant availing Cenvat credit on Base Oil received in short quantity. The Revenue issued a show cause notice for the demand of duty due to the short receipt of inputs. The Commissioner confirmed the demand for a specific period within the normal limitation period, along with interest and penalty. The appellant challenged this order.

Issue 2: Permissible limit for transit loss in case of Base Oil
The appellant argued that a limit of 0.1% should be allowed for transit loss based on previous decisions and guidelines. The Commissioner had considered the permissible limit and held that Cenvat credit availed on short receipt exceeding 0.1% is not permissible. The Tribunal agreed with the Commissioner's findings and rejected the appellant's argument regarding the applicability of the limit only to non-duty paid goods.

Issue 3: Applicability of prescribed limits to duty paid goods
The appellant contended that the prescribed limits were not applicable to duty paid goods, citing previous court decisions. However, the Tribunal upheld the Commissioner's decision that the limits apply regardless of whether the goods are duty paid or non-duty paid, emphasizing that losses depend on the nature of the goods.

Issue 4: Imposition of penalty under Rule 15(1) of Cenvat Credit Rules
Regarding the penalty imposed under Rule 15(1) of Cenvat Credit Rules, the Tribunal considered the nature of the dispute and past departmental practices. As the department had previously allowed such losses, the Tribunal set aside the penalty, stating that it was not warranted in this case.

In conclusion, the Tribunal disposed of the appeal by directing the appellant to compute and pay the differential amount after considering the permissible limit for transit loss. The penalty imposed was set aside, considering the circumstances of the case and past practices.