2013 (12) TMI 511 - AT - Central Excise

Wrong Cenvat credit SSI exemption under Notification No.8/2003 Held that - The present case is not covered by the exceptions and in respect of the branded goods being manufactured by the appellant, the provisions of the Notification No.8/2003-CE do not apply - no clause of this exemption notification would apply and in respect of branded goods being manufactured by the appellant, they would be eligible for Cenvat credit - If the appellant s contention is correct and the credit under dispute is in respect of the inputs meant for branded goods, which were lying in stock, they would be eligible for this credit, as they were not required to reverse the credit availed in respect of inputs meant for use in the branded goods which throughout the period of dispute were dutiable and not eligible for SSI exemption - this aspect has to be verified and for this purpose, the matter had to be remanded. Duty Demand - Shortage of Goods Held that - The Tribunal has upheld the allegation of clandestine removal detected in 2005, thus the appellant at this stage cannot say that in 2005 there was no shortage and the goods of same quantity cleared in 2007 are the same goods, which were alleged to have been found short and in respect of which duty had been paid - the duty demand and penalty upheld - Decided partly in favour of Assessee.

Summary

Issues:
1. Cenvat credit availed by the appellant for inputs meant for branded goods.
2. Duty demand for cleared products without payment.
3. Credit entry in PLA without actual payment.

Analysis:

Cenvat Credit Issue:
The appellant, a manufacturer of non-alloy steel rounds and MS bars, availed SSI exemption but manufactured branded goods bearing another person's brand name, paying duty and using Cenvat credit. The dispute arose over the reversal and re-availment of Cenvat credit on inputs meant for branded goods. The appellant argued they maintained separate accounts for branded and unbranded goods, making them eligible for Cenvat credit on branded goods. The Tribunal found a need to verify this claim and remanded the matter for further examination.

Duty Demand Issue:
The duty demand of Rs. 59,112 arose from the clearance of 15.7 M.T. of products in 2007 without payment, linked to a past dispute of alleged shortage in 2005. The appellant claimed the cleared goods in 2007 were the same as those found short in 2005, for which duty was paid. However, the Tribunal upheld the original allegation of unexplained shortage in 2005, leading to the duty demand and penalty being upheld.

Credit Entry Issue:
Regarding the credit entry of Rs. 5,167 in the PLA without actual payment, the appellant admitted the error and reversed the entry. The Tribunal found that since only a portion of this credit was utilized for duty payment, a penalty of Rs. 1,286 under Section 11AC was upheld, while the penalty of Rs. 5,167 was set aside.

In conclusion, the Tribunal upheld the duty demand of Rs. 59,112 along with interest and penalty, and the duty demand of Rs. 1,286 with a penalty. However, the matter of Cenvat credit demand of Rs. 3,21,564 was remanded for further investigation to determine the eligibility based on separate accounts maintained by the appellant for branded and unbranded goods.