2013 (9) TMI 22 - AT - Central Excise

Cenvat credit - Revenue held that the appellant is not entitled to avail cenvat credit in respect of the short quantity of H.R. Coils - Held that - shortage of coils was in respect of the weight of the same, which was to the tune of 0.039%. Admittedly, the manufacturer of the coils has paid the excise duty on the total weight of the coils and it is the same duty paid by the manufacturer , which stands claimed by the assessee. The marginal difference in weight of the coils, for which the appellant laid claim with the manufacturer, will not lead to denial of credit to the appellant inasmuch as the manufacturer has admittedly paid the duty on the full weight of the coils - Following decision of Commissioner of Central Excise, Nagpur Versus Ispat Industries Ltd. 2011 (2) TMI 198 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of duty against M/s. J.V. Strips Ltd.
2. Imposition of penalty on the Director of the company.
3. Denial of cenvat credit for shortage of coils.
4. Confirmation of demand of duty on escalated assessable value.

Confirmation of duty against M/s. J.V. Strips Ltd.:
The appeals arose from an impugned order confirming duty against M/s. J.V. Strips Ltd., along with interest and penalty. The appellant, engaged in manufacturing cold rolled steel strips, faced a demand of Rs.1,37,684 due to receiving H.R. Coils of lower weight than invoiced. The Revenue contended that cenvat credit could not be availed for the short quantity. However, the Tribunal ruled in favor of the appellant, citing a previous case law where the duty was paid by the manufacturer on the total weight of the coils. Consequently, the demand of Rs.1,37,684 was set aside, along with the interest and penalty imposed.

Imposition of penalty on the Director of the company:
A separate penalty of Rs.50,000 was imposed on the Director of the company under Rule 26 of the Central Excise Rules. The Tribunal found no justification for this penalty, considering the issues involved were of a legal and technical nature, and there was no evidence of malafide intent on the Director's part. Therefore, the penalty of Rs.50,000 was set aside.

Denial of cenvat credit for shortage of coils:
The shortage of coils, amounting to 0.039% in weight, led to a demand of Rs.1,37,684. However, as the manufacturer had paid duty on the total weight of the coils, the appellant was entitled to claim cenvat credit. Citing a precedent, the Tribunal held that the marginal difference in weight did not warrant denial of credit. Consequently, the confirmation of demand, interest, and penalty related to the shortage of coils was set aside.

Confirmation of demand of duty on escalated assessable value:
Another demand of Rs.1,80,866 was confirmed due to the escalation of prices of final products, resulting in debit notes raised by the appellants to their buyers. The Tribunal upheld this demand, as the appellant was liable to pay duty on the escalated assessable value. Therefore, the confirmation of this demand, along with interest and a 25% penalty, was maintained.

In conclusion, the Tribunal disposed of both appeals, setting aside the demands related to the shortage of coils and the penalty imposed on the Director, while upholding the demand on the escalated assessable value.