2007 (9) TMI 171 - AT - Central Excise

Once the goods are destroyed and remission has been granted, the credit availed should be reversed Instant case is covered by the clarification given by the circular 80/04 CX Demand of duty and levy of interest are justified Assessee s appeal rejected.

Summary

Issues:
1. Applicability of Board's Circular on remission of duty for destroyed goods.
2. Validity of duty demand and interest levy based on the Circular.

Analysis:
1. The case involved the appeal against an Order-in-Appeal confirming the duty demand and interest levy on the appellants who manufactured expired goods for a company and sought permission to destroy them. The Department issued a show cause notice demanding the amount of Cenvat credit availed on inputs used in manufacturing the destroyed goods. The appellants contested that the Board's Circular, on which the notice was based, was prospective and could not be applied retrospectively. However, the Commissioner (Appeals) held that the Circular was clarificatory and could be applied. The appellants appealed seeking a decision on merits.

2. The Tribunal, after hearing the arguments, agreed with the Department that the Board's Circular was clarificatory and applied to the appellants' case. It was determined that the appellants were required to reverse the credit as per the Circular, even though they had taken duty remission. Consequently, the demand for duty and levy of interest were considered justified. The Tribunal found no merit in the appeal and rejected it, upholding the duty demand and interest levy based on the applicability of the Board's Circular.

This judgment highlights the importance of understanding the applicability and implications of circulars issued by the authorities in matters related to duty remission and destruction of goods. The decision emphasizes that clarificatory circulars can have retrospective application and must be complied with, even if they impact transactions that occurred before the issuance of the circular.