2013 (4) TMI 357 - AT - Central Excise

Demand beyond the scope of Show Cause Notice - cenvat credit on the tin ingots - Option to pay reduced penalty equal to 25% - Held that - it is not open to a tribunal under the guise of moulding relief to pass order in respect of a demand which was never made. - order of Commissioner (Appeals) confirming the demand on a different account that what was the subject matter of show cause notice and adjudication proceedings, is bad in law and needs to be set-aside. There is also no evidence on record that Tin ingots received by the appellant were diverted elsewhere or that no Tin ingots were received and only documents were received by the appellant. Appellant has also brought on record to the effect that Tin ingots were consumed in their factory over a period of March 2005 to March 2006 and have not been consumed in a day, as held by Commissioner (Appeals). It is, therefore, held that cenvat credit with respect to Tin Ingots was rightly taken by the appellant and cannot be denied on the basis of presumptions and surmises. - Decided in favor of assessee.

Summary

Issues:
1. Duty demand on an issue not in the show cause notice.
2. Admissibility of cenvat credit on tin ingots.
3. Option of reduced penalty under Section 11AC.

Issue 1 - Duty Demand Not in Show Cause Notice:
The appeals were against an order imposing a penalty by the Commissioner (Appeals). The duty demand was based on clandestinely cleared brass ash and wrongly taken cenvat credit on ingots. The Commissioner confirmed a duty demand of Rs. 2,35,892 on brass ash and Rs. 6,31,742 on ingots. The issue raised was whether duty could be demanded on an issue not mentioned in the show cause notice. The appellant argued that the demand was beyond the notice's scope. Citing case laws, the appellant contended that only issues specified in the notice can be decided. The judgment highlighted that confirming demand on a different ground without a separate notice was impermissible. The judgment referenced cases like Hindustan Polymers Co. Ltd. v. C.C.E. and Bhor Industries Ltd. v. UOI to support this view.

Issue 2 - Admissibility of Cenvat Credit on Tin Ingots:
Regarding the cenvat credit on tin ingots, the appellant argued that the description of the Central Excise Tariff indicated the alloys' market presence. Invoices showed the classification of copper-alloy ingots under the tariff sub-heading 7403.2200. The appellant demonstrated that tin ingots were consumed over a period, contrary to the Commissioner's view that they were consumed in a day. The judgment noted that the Commissioner's arguments created suspicion but lacked evidence. It concluded that the cenvat credit on tin ingots was rightfully taken by the appellant, dismissing presumptions as a basis for denial.

Issue 3 - Option of Reduced Penalty under Section 11AC:
The issue of the reduced penalty under Section 11AC was raised by the appellant No. 3. The argument was that the option was not availed within the prescribed period, making the benefit unavailable. The judgment did not delve deeply into this issue, as the other issues were more central to the case.

In conclusion, the judgment set aside the duty demand on brass ash and upheld the admissibility of cenvat credit on tin ingots. The appellant's appeals were allowed on merits, leading to the dismissal of the Revenue's appeal. The penalty imposed on the appellant No. 2 was deemed unnecessary once the case favored the appellant. The judgment was pronounced on April 9, 2013, by Mr. H.K. Thakur.