2016 (12) TMI 1617 - AT - Central Excise

CENVAT credit - reversal of entire amount of proportionate credit against duty free removal of finished goods - Held that - there is no clarity in the facts of the case as mentioned in the Adjudication Order and the evidences placed by the appellant - the matter should be remanded to the Adjudicating Authority to decide after considering the submissions of the assessee - appeal allowed by way of remand.

Summary

Issues involved:
1. Recovery of Central Excise duty on liquid Oxygen
2. Availment of MODVAT Credit
3. Duty free clearance under Chapter X procedure
4. Imposition of penalty

Issue 1: Recovery of Central Excise duty on liquid Oxygen
The case involved the purchase of liquid Oxygen by the assessee under a Central Excise invoice and subsequent utilization in the manufacture of compressed Oxygen and medicinal Oxygen. The final products were cleared partly on payment of duty and partly without payment of duty. A Show Cause Notice was issued for the recovery of Central Excise duty, interest, and penalty. The Commissioner confirmed the demand of duty and imposed a penalty. The Tribunal directed the Adjudicating Authority to redetermine the duty amount applying the principle of first-in first-out for the relevant period. The Revenue's appeal challenging the Adjudicating Authority's method of determining duty free clearance was dismissed.

Issue 2: Availment of MODVAT Credit
The Adjudicating Authority observed that the assessee had not followed the FIFO method for quantifying the reversal of MODVAT Credit, leading to alternative methods being used. The appeal by the assessee contended that the Commissioner had not requested data to follow the FIFO method for re-quantification of the demand. Evidences such as letters were presented to support the claim. The Tribunal found a lack of clarity in the facts presented and the evidence submitted by the appellant. The matter was remanded to the Adjudicating Authority for a decision after considering the submissions of the assessee.

Issue 3: Duty free clearance under Chapter X procedure
The case involved duty free clearance of finished goods under Chapter X procedure. The Show Cause Notice sought the reversal of the proportionate credit against duty free removal of finished goods. The Commissioner confirmed the demand of duty and imposed a penalty. The Tribunal remanded the matter to the original authority for redetermining the duty amount based on the first-in first-out principle for common inventories stored by the assessee.

Issue 4: Imposition of penalty
The penalty was imposed by the Commissioner in the impugned order. The assessee appealed against the order, while the Revenue also filed an appeal seeking confirmation of the entire demand of recovery of MODVAT Credit as proposed in the Show Cause Notice. The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal by remanding the matter to the original authority for further consideration after clarifying the facts and evidence presented.

This detailed analysis of the judgment highlights the key issues of recovery of Central Excise duty, MODVAT Credit, duty free clearance, and imposition of penalty, providing insights into the Tribunal's decision-making process and the considerations involved in the case.