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2012 (9) TMI 740 - AT - Central ExciseCenvat credit manufacture of both dutiable and exempted products - Sodium citrate was a common input used in the manufacture of both the dutiable and exempted products - only 25 kgs. of the chemical was received by them and credit of Rs. 252/- taken thereon - Out of the said quantity of sodium citrate, only 146 grams were used in the manufacture of exempted product, which involved MODVAT/CENVAT credit of Rs. 1.50 - entire credit of Rs. 252/- on sodium citrate was also reversed - original authority, in adjudication of the relevant show-cause notice, directed them to pay 8% of the value of the exempted product cleared from their factory during the said period, amounting to over Rs. 30.5 lakhs - action of the original authority amused the first appellate authority which, however, set aside - appeal dismissed
Issues:
1. Valid authorization for filing an appeal before CESTAT, Bangalore. 2. Maintainability of the appeal. 3. Admissibility of MODVAT/CENVAT credit on common inputs. Issue 1: Valid authorization for filing an appeal before CESTAT, Bangalore The appeal was filed by the Assistant Commissioner of Central Excise, Hyderabad 'K' Division, authorized by the Commissioner of Central Excise, Hyderabad-IV. The Commissioner's authorization order was found to be invalid as it did not comply with the requirements of Section 35B(2) of the Central Excise Act. The power to authorize an appeal against an order passed by the Commissioner (Appeals) is vested in the Review Committee of Commissioners of Central Excise, not in a single Commissioner. The appeal was filed without valid authorization, rendering it not maintainable. Issue 2: Maintainability of the appeal Apart from the lack of valid authorization, the cause of action for the appeal raised concerns. The respondent was involved in the manufacture of both dutiable and exempted products during the material period. The appellant had availed MODVAT/CENVAT credit on common inputs used in the manufacture of exempted products. However, upon realizing the error, they reversed the credit amount. The original authority directed the payment of 8% of the value of the exempted products cleared from the factory, amounting to over Rs. 30.5 lakhs. The first appellate authority set aside this demand as time-barred, leading to the dismissal of the appeal by the tribunal. Issue 3: Admissibility of MODVAT/CENVAT credit on common inputs The appellant had availed MODVAT/CENVAT credit on sodium citrate used in the manufacture of exempted products. They later reversed the credit amount upon discovering the mistake. The dispute arose from the availment of credit on common inputs during the material period. The original authority directed the payment of a significant amount, which was later set aside by the first appellate authority as time-barred. The tribunal dismissed the appeal due to non-maintainability, further emphasizing the irregularities in availing credit on common inputs. In conclusion, the tribunal dismissed the appeal due to the lack of valid authorization for filing, alongside concerns regarding the admissibility of MODVAT/CENVAT credit on common inputs used in the manufacture of exempted products. The judgment highlighted the importance of complying with statutory provisions and maintaining separate accounts for dutiable and exempted products to avoid disputes related to credit availment and tax liabilities.
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