2012 (7) TMI 197 - AT - Central Excise

Storage of inputs outside the factory premises - Dis-allowance of Cenvat Credit - imported inputs viz. Ferro Manganese, Silico Manganese, Ferro Chrome and Ferro Manganese Slag - Held that - The Circular No. 206/40/96 CX., dated 1-5-96 issued by the CBEC permit storage of inputs outside the factory premises - The storage of goods outside the licensed factory premises and the credit was permissible - for a mere technical breach, the substantial benefit cannot be denied as decided in M/s. Mangalam Enterprises Vs. Commr. of Central Excise & Customs, Vadodara 2002 (12) TMI 164 (Tri) - deviations from normal practice necessitated by business exigencies are no ground for denial of legally available facility - The storage of inputs outside the factory premises, prior to being brought to the factory, is specifically recognized by the aforesaid Circulars of the Board and the Commissioner as acceptable to allow for Cenvat credit- the impugned order is set aside and the case is remanded to Ld. Commissioner to decide the case afresh.

Summary

Issues:
1. Disallowance of Cenvat Credit and penalty imposition under Cenvat Credit Rule.
2. Confiscation of goods and redemption on fine under Central Excise Rules.
3. Allegations of not following conditions of permission for storing inputs outside the factory.
4. Appellant's contentions regarding permission for storage, weighing inputs, and compliance with prescribed manner.
5. Department's contention and confirmation of Ld. Commissioner's findings.
6. Tribunal's analysis of the case, consideration of submissions, and decision to set aside the impugned order for fresh consideration.

Detailed Analysis:
1. The appeal was filed against the disallowance of Cenvat Credit of Rs.1,21,55,289/- and the imposition of an equal amount of penalty under Rule 15(2) of Cenvat Credit Rule, along with the confiscation of goods valued at Rs.30,38,82,231/- under Rule 15(1) of Cenvat Credit Rules. The appellant availed Cenvat credit of SAD on imported inputs without bringing them inside the factory, leading to the initiation of proceedings by the Department. The Ld. Commissioner upheld the proposal in the show cause notice, resulting in the appeal being filed against the decision (Para 2-3).

2. The appellant contended that they were granted permission for storing inputs outside the factory due to space constraints and that they complied with the prescribed manner of utilizing the inputs. They argued that there was no allegation of misutilization or suppression of facts, and they highlighted previous permissions granted by the Jurisdictional Assistant Commissioner. The appellant cited various case laws to support their contention that the Cenvat credit should not be disallowed for technical breaches (Para 4).

3. The Department reiterated the findings of the Ld. Commissioner, emphasizing the non-fulfillment of conditions of the permission granted for storing inputs outside the factory (Para 5).

4. The Tribunal analyzed the case and found that the appellant had not fulfilled the conditions of the permission granted by the Department, specifically regarding taking credit on inputs before bringing them inside the factory. However, it was noted that there was no allegation of non-payment of duty or misutilization of goods. The Tribunal agreed with the appellant's contention that the Ld. Commissioner did not consider relevant case laws and circulars, leading to a violation of the principle of natural justice. Therefore, the impugned order was set aside, and the case was remanded to the Ld. Commissioner for fresh consideration, with a directive to decide the issue expeditiously (Para 6).