2010 (8) TMI 216 - AT - Central Excise

Penalty - waste oil - cenvated inputs sent to the job workers for processing, which had not been returned - proof of return of the same has not been produced not covered by heading 34.03 nor excisable - interest on wrongly availed Cenvat credit is upheld - appeals filed by the Appellant as well as by the Revenue are dismissed

Summary

Issues:
1. Recovery of Central Excise Duty and Cenvat credit on various irregularities noticed during a factory visit.
2. Show cause notice issued for the recovery of duty and Cenvat credit along with interest and penalty.
3. Adjudication by Additional Commissioner and subsequent appeal before the Commissioner (Appeals).
4. Appeals filed challenging the Commissioner (Appeals)'s order on duty demand, penalty, interest, and refund.

Analysis:

Issue 1: Recovery of Central Excise Duty and Cenvat credit
The appellant, a motorcycle manufacturer, faced irregularities during a factory visit, including non-payment of duty on waste oil, unreturned processed inputs from job workers, damaged inputs with wrong Cenvat credit, leading to a show cause notice for duty recovery. The Additional Commissioner confirmed demands, appropriated previous payments, and imposed penalties. The Commissioner (Appeals upheld certain demands but reduced penalty and interest, leading to appeals from both parties.

Issue 2: Show Cause Notice and Adjudication
The show cause notice detailed duty and Cenvat credit demands for the period from 1998-99 to 2001-02, with the appellant paying the entire amount before the notice. The Additional Commissioner's order confirmed demands, imposed penalties, and provided an option for penalty payment. The Commissioner (Appeals) upheld some demands but reduced penalty and interest, prompting appeals from both sides.

Issue 3: Appeals and Adjudication
The Commissioner (Appeals) upheld demands related to unreturned processed inputs and damaged inputs but dropped the waste oil demand. The appellant's appeal challenged the upheld penalty and interest, while the department appealed against the dropped demand and reduced penalty. The department also contested the interest liability reduction.

Issue 4: Appeal Decision
The appellant argued against the duty on waste oil, unreturned processed inputs, and penalties, emphasizing prior payments and challans produced. The department contended the waste oil classification and unreturned inputs, citing longer limitation periods. The Tribunal upheld dropping the waste oil demand, citing non-excisable nature and incorrect classification under Heading 34.03. It also found in favor of the appellant regarding returned processed inputs, denying penalty imposition due to lack of evidence of illicit diversion. The Tribunal dismissed both appeals, upholding the Commissioner (Appeals)'s decision.

This comprehensive analysis covers the legal judgment's key issues, arguments, and the Tribunal's decision, providing a detailed overview of the case's complexities and outcomes.