2010 (9) TMI 444 - HC - Central Excise

Cenvat credit input cleared as such - determining the amount payable under Rule 3(4) of Cenvat Credit Rules, 2002 as per FIFO method, first month be December, 2003 and not January, 2004 - according to Annexure-A to the show cause notice the most proximate month from the date of clearance of inputs is January, 2004 and, therefore, instead of December, 2003 first of all raw materials purchased date of January, 2004 have to be taken into account - applying FIFO method the department should have taken into account instead of December, 2003 January, 2004 - finding of fact was confirmed by the Tribunal Appeal dismissed

Summary

Issues:
1. Application of FIFO method for calculation under CENVAT Credit Rules, 2002.
2. Imposition of penalty and interest for contravention of CENVAT Credit Rules, 2002.

Analysis:

Issue 1: Application of FIFO Method
The appeal before the Gujarat High Court revolved around the application of the FIFO (First In, First Out) method for calculation under the CENVAT Credit Rules, 2002. The Commissioner of Central Excise & CustomsSurat-I filed a Tax Appeal questioning the acceptance of the contention that the first month for FIFO calculation should be January 2004, not December 2003. The differential Central Excise duty, interest on delayed payment, and penalty were demanded based on this calculation. The respondent-assessee appealed the adjudicating authority's decision, which was upheld by the Commissioner (Appeals) and subsequently by the Tribunal. The Commissioner (Appeals) and the Tribunal both concluded that January 2004 should be considered the first month for FIFO calculation, not December 2003, as per Annexure-A to the show cause notice. The High Court, after considering the submissions and orders, upheld the findings of the lower authorities, stating that no substantial question of law arose from the Tribunal's order, and dismissed the appeal.

Issue 2: Imposition of Penalty and Interest
The second issue in the case pertained to the imposition of penalty and interest on the assessee for contravention of the CENVAT Credit Rules, 2002. The adjudicating authority had imposed a penalty and interest, which was challenged by the revenue. The Commissioner (Appeals) allowed the appeal of the respondent-assessee, leading to a further challenge by the revenue before the Tribunal. The Tribunal upheld the Commissioner (Appeals) decision, emphasizing the detailed consideration of facts and calculations leading to the right conclusion. The High Court, after reviewing the orders and submissions, noted that both the Appellate authorities had provided findings of fact on the issue. Consequently, the High Court concluded that no substantial question of law arose from the Tribunal's order and dismissed the appeal.

In conclusion, the Gujarat High Court affirmed the decisions of the lower authorities regarding the application of FIFO method for calculation under the CENVAT Credit Rules, 2002, and the imposition of penalty and interest for contravention of the same rules. The High Court found no substantial question of law arising from the Tribunal's order and dismissed the appeal accordingly.