2015 (11) TMI 767 - AT - Central Excise

Demand of interest and penalty on reversal of credit - manufacture of erection and installation of the furnace within the factory of the appellant - Revenue denied the Cenvat credit only on the ground that no duty was paid on the furnace either by the appellant or contractor i.e. M/s. Bharat Gears Ltd, therefore credit for input used for manufacture of erection and installation of the furnace is not admissible - Held that - Input on which Cenvat credit was availed were indeed used in manufacture of erection and installation of the furnace, in terms of Notification No. 67/95 CE dated 16/3/95 input includes in the goods used in the manufacture of capital goods and if such capital goods used within the factory for manufacture of dutiable goods the furnace was exempted under Notification No. 67/95 but input used in manufacture of such furnace is clearly covered under the definition of input therefore the credit on the input used in the manufacture of furnace is admissible. However appellant has not disputed the denial of Cenvat Credit and paid the said amount admittedly and not contested. In view of the my above observations Cenvat Credit was otherwise admissible, penalty should not have not been imposed therefore said aside the penalty. As regard the interest demanded by the Ld. Commissioner (Appeals) in his order, I find that the adjudicating authority in his order explicitly dropped the demand of interest against which Revenue has not filed any appeal before the Commissioner(Appeals) therefore the said portion related to interest of the order attained finality and since no appeal made by the Revenue Ld. Commissioner(Appeals) should not have passed any order in respect of interest, for this reason the interest demanded by the Commissioner(Appeals) in his order is hereby dropped. It is made clear that since the appellant have not contested demand of Cenvat Credit which was paid by them suo- moto without contest the same stand confirmed. - Decided partly in favour of assessee.

Summary

Issues: Appeal against Order-in-Appeal upholding demand of Cenvat Credit, interest under Rule 14 of Central Excise Rules, and denial of waiver of penalty.

Analysis:
1. The appellant purchased inputs for manufacturing a furnace through a contractor. The Revenue denied Cenvat Credit as no excise duty was paid on the furnace erected in the factory. The adjudicating authority confirmed the demand and imposed a penalty equal to the amount. The appellant appealed for waiver of penalty, which was rejected by the Commissioner(Appeals) who also demanded interest under Rule 14 of Central Excise Rules.

2. The appellate tribunal noted that the appellant had already paid the disputed Cenvat Credit and did not contest it. The Revenue's argument that no duty was paid on the furnace was dismissed as the furnace qualified as specified capital goods under Cenvat credit Rules, 2002. The input used in manufacturing the furnace was considered admissible for Cenvat Credit under Notification No. 67/95 CE. The tribunal set aside the penalty as the Cenvat Credit was found to be admissible, and the appellant had paid the disputed amount without contesting it.

3. Regarding the interest demanded by the Commissioner(Appeals), the tribunal observed that the adjudicating authority had dropped the demand of interest, and the Revenue did not appeal against it. Therefore, the tribunal ruled that the Commissioner(Appeals) should not have passed any order regarding interest. Consequently, the interest demanded by the Commissioner(Appeals) was dropped, and the appeal was allowed based on the above observations.