2011 (5) TMI 715 - AT - Central Excise

Penalty - extended period of limitation - cenvat credit on inputs and capital goods - sales of waste and scrap arising from inputs and capital goods - Once it is found that the appellants had suppressed the relevant fact from Department, consequently department was justified in insisting for imposition of the penalty - decision of the Commissioner in confirming demand in respect of clearance made on waste and scrap of inputs and capital goods and also on waste and scrap arising during the course of mechanical working in connection with repair and maintenance invoking extended period of limitation and imposition of penalty is justified - Appeal is rejected

Summary

Issues:
Appeal against Commissioner (Appeals) order dated 11-3-05; Clearances of waste and scrap of inputs/capital goods prior to 1-4-2000; Applicability of Rule 57F(18) and Rule 57S(2)(c); Demand of duty, interest, and penalty; Extended period for demand of duty; Imposition of penalty; Interpretation of Section Note 8A of Section 15 of the CETA; Mechanical working of metal; Relevant information suppression; Precedents cited by both parties.

Analysis:
The case involves an appeal against the Commissioner (Appeals) order dated 11-3-05 regarding clearances of waste and scrap of inputs/capital goods prior to 1-4-2000. The appellants, manufacturers of lead/zinc metal concentrates, paid excise duty on final products from 27-7-96 and availed modvat credit on inputs and capital goods. The dispute arose from the removal of waste and scrap without payment of duty, leading to a demand of Rs. 22,33,063/- for the period 1997-98 to 2001-2002. The original authority confirmed a demand of Rs. 20,68,330/- with interest and imposed a penalty under Section 11AC, which was upheld by the Commissioner (Appeals).

The appellants contested the order on various grounds, including the non-liability of clearances made prior to 1-4-2000 for excise duty, citing Rule 57F(18) and Rule 57S(2)(c). They argued that waste and scrap arising from inputs/capital goods were not dutiable and that no relevant information was suppressed. The appellants relied on multiple decisions to support their claims.

The Learned SDR, however, maintained that duty was required for clearances of waste and scrap of inputs used by the appellants. He supported the Commissioner's order, invoking the extended period and penalties. The SDR cited precedents to justify the demand of duty and penalties.

The Tribunal carefully considered the submissions and records. It noted that the appellants failed to provide evidence supporting their claim that duty paid on inputs and capital goods was not taken as credit. The onus was on the appellants to demonstrate entitlement to clear waste and scrap without duty payment. The Tribunal found the Commissioner's decision justifiable for clearances made prior to 1-4-2000 and for waste and scrap arising from mechanical working during repair and maintenance activities.

The Tribunal rejected the appeal, upholding the demand of duty, interest, and penalties. It distinguished the cited precedents and concluded that the Commissioner's decision on the demand and penalties was justified based on the evidence and legal provisions.

In conclusion, the Tribunal affirmed the Commissioner's decision, emphasizing the appellants' failure to substantiate their claims and the applicability of relevant rules and precedents in determining the duty liability for clearances of waste and scrap.