2007 (7) TMI 27 - AT - Central Excise

Cenvat/Modvat - Department contended that availing of concession simultaneously by the raw material supplier for the raw material and by the appellants for the finished goods using such raw materials is not allowable - Held that department contention was correct and allowed

Summary

Issues:
Appeal arising from Order-in-Appeal confirming demand of duty, interest, and penalty for procuring cotton bleached woven fabrics without payment of duty. Interpretation of Rule 9A regarding credit availability for finished goods. Justification for penalty imposition under Section 11AC.

Analysis:
The appeals arose from a common Order-in-Appeal confirming demand of duty, interest, and penalty against the appellants for procuring cotton bleached woven fabrics without paying duty. The original authority held that the appellants received goods under invoices indicating suppliers' deemed Modvat credit, confirming demands and imposing penalties. The Commissioner (Appeals) upheld these decisions. The appellants argued that they were entitled to credit under Rule 9A despite suppliers availing deemed credit. They cited relevant case laws to support their position and contended that penalty imposition was unjustified. The Department argued that since the suppliers did not pay duty on bleached fabrics, the appellants could not claim credit under Rule 9A. The Tribunal noted that the suppliers had not paid duty, and the appellants received goods without duty payment, thus Rule 9A(1) applied. The Tribunal upheld the demand for duty but set aside penalties, citing the issue as an interpretation matter and justifying the absence of penalty under Section 11AC. The appeals were partly allowed based on these findings.