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2010 (8) TMI 233 - AT - Central ExciseCenvat credit NCCD - NCCD paid on the clearance of POY for home consumption and no NCCD was being paid by on the clearances of POY for captive consumption for use in the manufacture of PT4 or on the clearances of POY free of duty to 100% EOUs by availing the benefit of Notification No. 1/95-C.E - credit taken no duty paid on the POY Held that - suppression of fact, mis-declaration and fraud is involved - cenvat credit can rightly be demanded under Rule 14 of Cenvat Credit Rules, 2004 with interest - appellants shall be liable to pay penalty equivalent to duty as per the provisions of Section 11AC of Central Excise Act, 1944
Issues Involved:
1. Recovery of Cenvat credit of Rs. 1,18,21,343/- on NCCD availed by the appellant for the period March 03 to July 04. 2. Denial of Cenvat credit of NCCD on POY used in the manufacture of PTY for the period August 04 to November 05. Detailed Analysis: Issue No. 1: Recovery of Cenvat Credit of Rs. 1,18,21,343/- on NCCD The first issue concerns the recovery of Cenvat credit amounting to Rs. 1,18,21,343/- on National Contingency Calamity Duty (NCCD) availed by the appellant for the period from March 2003 to July 2004. The appellant had paid NCCD on captively consumed POY by raising supplementary invoices without actually making any payment by debiting in PLA or Cenvat account of NCCD. The Tribunal had earlier quashed the demand for NCCD under Notification No. 67/95-C.E. and 1/95-C.E. However, the present contention is that the supplementary invoices were issued without actual payment, which led to fraudulent credit claims. The Tribunal found that the appellant had taken Cenvat credit on the basis of supplementary invoices issued on 31-8-04 without the backing of any debit entry in the PLA or basic excise duty credit. This credit was then used for payment of NCCD on captively consumed POY. The Tribunal held that this credit was taken fraudulently and is therefore recoverable along with interest under Rule 14 of Cenvat Credit Rules, 2004, and penalty under Rule 15 of Cenvat Credit Rules, 2004, read with Section 11AC of Central Excise Act, 1944. The Tribunal upheld the demand for Rs. 1,18,21,343/- along with interest and penalty but provided the appellant with an option to pay the duty, interest, and 25% of the duty towards penalty within thirty days to avail a reduced penalty. Issue No. 2: Denial of Cenvat Credit of NCCD on POY for the Period August 04 to November 05 The second issue pertains to the denial of Cenvat credit of NCCD on POY used in the manufacture of PTY for the period from August 2004 to November 2005. The contention was that while PTY attracted basic central excise duty, it was exempt from NCCD, and thus, Cenvat credit was not admissible under Rule 6 of the Cenvat Credit Rules, 2002/2004. The Tribunal noted that PTY attracted basic excise duty and was only exempt from NCCD, which does not make it an exempted good under Rule 2(d) of the Cenvat Credit Rules, 2004. The Tribunal found that the Commissioner had dropped similar proceedings for the subsequent period from December 2005 to February 2008, concluding that when basic excise duty was payable on PTY, the provisions of Rule 6 could not be invoked merely because NCCD was exempted. Therefore, the Tribunal upheld the appeal regarding the second issue and denied the demand for NCCD credit amounting to Rs. 1,28,04,499/-. Conclusion: The Tribunal upheld the demand for Rs. 1,18,21,343/- along with interest and penalty for the first issue, providing an option for reduced penalty payment within thirty days. For the second issue, the Tribunal ruled in favor of the appellant, denying the demand for Rs. 1,28,04,499/- on the grounds that PTY was not an exempted good as it attracted basic excise duty.
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