2015 (1) TMI 1083 - AT - Central Excise

Denial of CENVAT Credit - Captive consumption - Held that - Oxygen gas manufactured by M/s. IMIL was cleared to M/s. IIL during the period October, 2000 to March, 2001 were through pipeline without any cover of invoice and in March, 2001 on realizing their mistake M/s. IMIL paid the duty along with interest are not in dispute. In these circumstances, the allegation of suppression of facts, fraud, collusion or any wilful misstatement are not sustainable. Therefore, as M/s. IMIL have paid duty along with interest of their own. In these circumstances, we hold that M/s. IIL is entitled to take credit of the duty paid by M/s. IMIL on oxygen gas during the impugned period. In these circumstances, the duty demand confirmed against M/s. IMIL is not sustainable and not warranted as duty has already been paid by M/s. IMIL along with interest. Further, the Cenvat credit availed by M/s. IIL is proper and legal in the eyes of law. Therefore, the impugned order to deny Cenvat credit M/s. IIL is set aside as the demands are not sustainable and further it is held that there is no suppression of facts, fraud, collusion or wilful misstatement. In these circumstances, penalties on the appellants are not imposable. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Denial of Cenvat credit, imposition of penalty on M/s. Ispat Industries Ltd. and co-appellant for oxygen gas clearance without invoice cover from M/s. Ispat Metallics India Ltd., duty payment by M/s. IMIL, investigation revealing clearance without invoice cover, confirmation of duty demand against M/s. IMIL, denial of Cenvat credit to M/s. IIL, imposition of penalties on parties.

Analysis:
In the case, M/s. Ispat Industries Ltd. and co-appellant filed appeals against orders denying Cenvat credit and imposing penalties due to the clearance of oxygen gas from M/s. IMIL to M/s. IIL without invoice cover. The situation arose when M/s. IMIL inadvertently delivered oxygen to M/s. IIL through a pipeline without proper documentation. Upon discovering the error, M/s. IMIL paid the duty with interest, rectifying their mistake. An investigation later revealed this discrepancy, leading to proceedings against both units and individuals for duty demand, denial of Cenvat credit, and proposed penalties.

During the proceedings, it was established that M/s. IMIL rectified their mistake by paying duty and interest, absolving any allegations of suppression, fraud, collusion, or wilful misstatement. As a result, the Appellate Tribunal found that M/s. IIL was entitled to take credit for the duty paid by M/s. IMIL on the oxygen gas. The Tribunal deemed the duty demand against M/s. IMIL as unsustainable since the duty had already been settled. Consequently, the denial of Cenvat credit to M/s. IIL was set aside, as the credit availed was lawful and proper under the circumstances. The Tribunal also concluded that penalties on the appellants were not justified, given the absence of suppression, fraud, collusion, or wilful misstatement.

In the final decision, the impugned order was overturned, and the appeals were allowed with consequential relief. The Tribunal's ruling favored M/s. IIL, acknowledging their right to the Cenvat credit and dismissing the penalties imposed on the parties involved.