2013 (1) TMI 358 - HC - Central Excise

Demand of duty on the CENVAT credit - Whether the Tribunal is justified in holding that there is a possibility of using of inputs inspite of respondents statement when the respondent contends that the same is unfit for use? - Held that - Respondent contested that the goods were damaged during transit and as a result of which the inputs could not be used for manufacturing the final products. If it is so, the Tribunal did not consider the vital aspect of the matter on account of the damaged causes to the inputs, it cannot be used for final product and when the respondent has claimed the insurance, we are at a loss to understand how the claim of the appellant can be considered as premature. When the demand is in respect of the period from January 1997 to November 2000, when the appeal is disposed of in the year 2005, at least the Tribunal was required to examine, whether the respondent has used inputs for the manufacture of final products and duty has been paid by the respondent to the appellant and without ascertaining this factual aspect, the Tribunal has erroneously passed an order. In the circumstances, the matter is required to be reconsidered by the Tribunal afresh in accordance with law. Accordingly, this appeal is allowed and all the contentions are left open.

Summary

Issues:
1. Divergent findings of the Commissioner of Central Excise and CESTAT
2. Interpretation of Rule 57 of Central Excise Rules 1944
3. Imposition of penalty under Sec. 11AA of Central Excise Act, 1944
4. Justification for imposing interest under Sec. 11AB
5. Re-framing of substantial questions of law
6. Appeal against the Tribunal's decision
7. Disputed CENVAT credit on damaged goods
8. Tribunal's decision on the damaged goods issue
9. Consideration of the period in question
10. Examination of the use of inputs for final products
11. Tribunal's failure to address substantial questions of law

Analysis:

The judgment concerns the appeal against divergent findings of the Commissioner of Central Excise and CESTAT regarding the levy of Central Excise Duty on CENVAT credit availed but not fully accounted for. The court re-framed substantial questions of law, including the justification for the premature demand of duty and the possibility of using damaged inputs for manufacturing. The respondent had availed CENVAT credit on import capital goods, leading to a demand for recovery by the appellant-Revenue. The Tribunal reversed the Commissioner's order, citing the possibility of using damaged goods for manufacturing. However, the court found the Tribunal's decision erroneous as it failed to consider crucial aspects, necessitating a fresh consideration of the matter.

The court highlighted the need to examine whether the respondent used inputs for final products and paid the duty to the appellant for the disputed period. The Tribunal's failure to address these critical issues led to the appeal being allowed, with all contentions left open for reconsideration. The judgment underscores the importance of a comprehensive assessment of factual aspects and adherence to legal principles in excise duty matters to ensure a fair and just decision.