2015 (3) TMI 383 - AT - Central Excise

CENVAT Credit - absence of any machinery provisions in the Act or the Rules for the recovery - Rule 57CC - Held that - Appellants have made an offer to reverse the actual modvat credit taken on the inputs which have been used in the manufacture of exempted product in terms of Rule 57C. It is seen that they have also deposited an amount of ₹ 35,000/- towards such reversal. Keeping in view the Tribunal's decision and the appellants offer to reverse the credit, we set aside the impugned order and remand the matter to the original adjudicating authority for quantification of the actual modvat credit availed by the appellants on the inputs used in the manufacture of exempted product. Penalty of ₹ 25,000/- imposed upon the appellants is also set aside - Decided in favour of assesse.

Summary

Issues:
Confirmation of duty demand and imposition of personal penalty on the appellants for availing modvat credit on inputs used in manufacturing dutiable and exempted products.

Analysis:
The Appellate Tribunal CESTAT Kolkata, comprising SMT. Archana Wadhwa and Jeet Ram Kait, JJ., addressed the appeal where the authorities below confirmed a duty demand of &8377; 1,32,320.00 and imposed a personal penalty of &8377; 25,000 on the appellants for availing modvat credit on inputs used in manufacturing both dutiable and exempted products. The confirmation of duty was done under Rule 57CC. However, the appellants offered to reverse the actual modvat credit taken on inputs used in manufacturing exempted products as per Rule 57C and deposited &8377; 35,000 towards this reversal. The Managing Director of the appellant's company referred to a previous Tribunal order highlighting the absence of specific provisions for the recovery of 8% of the price under Rule 57CC from the assessee, which supported their case.

The Tribunal, considering the appellant's offer to reverse the credit and the absence of machinery provisions for recovery under Rule 57CC, set aside the impugned order. The matter was remanded to the original adjudicating authority for quantification of the actual modvat credit availed by the appellants on inputs used in manufacturing exempted products. Additionally, the penalty of &8377; 25,000 imposed on the appellants was also set aside. The appeal was disposed of based on these considerations, providing relief to the appellants and emphasizing the need for clarity in legal provisions regarding the recovery of amounts under such circumstances.