2008 (8) TMI 182 - AT - Central Excise

Welding Rectifiers issued for captive consumption on payment of duty capital goods used in mfg. of machines for captive use - Some welding rectifiers are sent to work site & some of them are retained in the factory for use - According to revenue, the welding rectifiers available in the factory may not be the ones which have been duty paid - It is not disputed given point of time, 19 welding rectifiers were available in the factory of the respondents and were being used credit admissible

Summary

Issues:
1. Identification of welding rectifiers for captive consumption
2. Cenvat credit on plate bending/rolling machine
3. Imposition of penalty for irregular Cenvat credit availment

Analysis:
1. The case involved the identification of welding rectifiers used for captive consumption. The Department raised concerns about the lack of a system to distinguish duty-paid rectifiers from others in the factory. The Commissioner (Appeals) accepted the respondent's claim that 19 rectifiers remained in the factory at all times. The Tribunal upheld this decision, noting that the rectifiers were being used in the factory, and there was no evidence of removal or replacement. The credit on rectifiers removed for captive consumption was allowed based on the rectifiers' availability in the factory.

2. Regarding the Cenvat credit on the plate bending/rolling machine, the Department argued that credit should only be taken after the machines are received in the factory. The Commissioner (Appeals) ruled in favor of the respondent, stating that even though the machines were temporarily sent to a work site, they were eventually brought back for manufacturing excisable goods. The Tribunal agreed, emphasizing that the credit availment was not deliberate, and no penalty should be imposed. However, interest was deemed payable for the period when credit was wrongly taken, necessitating quantification by the adjudicating authority.

3. The Tribunal addressed the irregular Cenvat credit of Rs. 47,048/- admitted by the respondents, which was paid with interest. Following established precedent, a penalty of 25% of the irregular credit amount was imposed, resulting in a penalty of Rs. 11,762/-. The matter was remanded to the adjudicating authority for calculating the interest on Cenvat credit for the plate bending machine/rolling machine. The Department's appeal was allowed only to the extent of determining the interest amount payable.

In conclusion, the Tribunal's judgment clarified the eligibility of the respondents for credit on welding rectifiers used for captive consumption and the appropriate timeline for Cenvat credit on the plate bending/rolling machine. The imposition of a penalty for irregular credit availment was limited to 25% of the amount, with further directions for interest calculation by the adjudicating authority.