2011 (7) TMI 603 - AT - Central Excise

Cenvat credit on clearance of waste and scrap generated during manufacturing by job work material - assessee, engaged in the manufacture of bearing races/components on job work - period of limitation - Held that - Tribunal in assessee s own case has held that assessee is entitled to utilise Cenvat credit on clearance of waste and scrap generated during the manufacture by job work material. Following the precedent decision issue has been decided in favor of assessee. Commissioner (Appeals) has rightly held that there is no suppression as the asseessee has already informed to the department for availment of Modvat credit and payment of excise duty on scrap generated on bearings components on 21.2.2000. Therefore, the extended period in this case is not invokable.

Issues:
1. Confirmation of demand for the period 2001 to 20th June 2003.
2. Dropping of the penalty under Section 11AC of Central Excise Act, 1944.
3. Availment of Cenvat credit on inputs and capital goods.
4. Contravention of provisions of Notification No. 214/86-CE.
5. Extended period invokable due to suppression of facts.
6. Entitlement to take credit for waste and scrap generated during manufacturing.

Analysis:
1. The Appellate Tribunal dealt with appeals filed by both the assessee and the Revenue against the impugned order confirming the demand for the period 2001 to 20th June 2003. The Commissioner (Appeals) had dropped the penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal noted that the assessee contested the case on limitation and merits. The Tribunal found that the extended period invoked by the Revenue was not sustainable as the assessee had informed the department about the availment of Modvat credit and payment of excise duty on scrap generated. Therefore, the demand was held not sustainable, and the appeal filed by the assessee was allowed with consequential relief.

2. The issue of dropping the penalty under Section 11AC of the Central Excise Act, 1944 was raised in the appeal filed by the Revenue. The Commissioner (Appeals) had confirmed the demand but dropped the penalty. The Tribunal considered the submissions made by both sides and found that the assessee had already informed the department about the relevant details. As there was no suppression of facts, the extended period for invoking the penalty was deemed not sustainable. Consequently, the appeal filed by the Revenue was dismissed.

3. The case involved the assessee wrongly availing Cenvat credit on inputs and capital goods during the period 2000-2001 and 2002-2003. The Tribunal noted that the assessees were engaged in job work, and M.S. turning scrap arose during this activity. The Tribunal found that the assessee had contravened the provisions of Notification No. 214/86-CE by removing bearing races at Nil rate of duty. The Show Cause Notice issued in 2004 led to the confirmation of demands by the adjudicating authority. However, the Commissioner (Appeals) dropped the penalty but confirmed the demand. The Tribunal, considering the facts and submissions, allowed the appeal filed by the assessee based on limitation and merits.

4. The issue of contravention of the provisions of Notification No. 214/86-CE was crucial in this case. The Tribunal observed that the assessee had wrongly availed Cenvat credit on inputs and capital goods while removing bearing races at Nil rate of duty. This contravention led to the issuance of a Show Cause Notice in 2004. The Commissioner (Appeals) confirmed the demand but dropped the penalty. The Tribunal, after considering the submissions and precedents, found in favor of the assessee based on limitation and merits, dismissing the appeal filed by the Revenue.

5. The question of whether the extended period was invokable due to suppression of facts was raised during the proceedings. The Tribunal noted that the assessee had informed the department about the relevant details regarding the Modvat credit and excise duty payment on scrap generated. As there was no suppression of facts, the Tribunal found the extended period invoked by the Revenue not sustainable. Consequently, the demand was deemed not sustainable, and the appeal filed by the assessee was allowed.

6. The entitlement to take credit for waste and scrap generated during manufacturing was a significant aspect of the case. The Tribunal referred to precedents and held that the assessee was entitled to utilize Cenvat credit on clearance of waste and scrap generated during manufacturing by job work material. Based on this interpretation and the merits of the case, the Tribunal found in favor of the assessee, allowing the appeal with consequential relief and dismissing the appeal filed by the Revenue.

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