2017 (12) TMI 160 - AT - Central Excise

Non-payment of duty - Revenue argued that the appellants were aware of the revision of price and chose not to pay the differential duty on their own - Rule 9 (1) (b) of the Cenvat Credit Rules 2004 - Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules 2001 - Held that - A perusal of Rule 6 clearly shows that the duty under the Rule is for the goods received by the manufacturer and not in respect of goods sold by the manufacturer - It is apparent that in terms of Rule 6 the duty is paid on behalf of the supplier of inputs under the said procedure prescribed under Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules 2001. Since the goods was received in the factory the respondents were entitled to the credit of the same. A perusal of the show-cause notice shows that while the duty has been demanded for diversion of the goods received under Rule 19 (2) of the Central Excise Rules. No allegation that the said goods were used by the appellant for other purposes. Demand set aside - appeal dismissed - decided against Revenue.

Issues:
- Appeal against order setting aside order-in-original for differential duty on valuation issue and denial of credit under Rule 9 (1) (b) of Cenvat Credit Rules, 2004.
- Allegations of suppression, mis-declaration, and non-payment of duty.
- Argument on revision of price and payment of duty.
- Dispute over availing Cenvat Credit on supplementary invoices.
- Interpretation of Rule 6 of Central Excise (Removal of Goods at Concessional Rate of duty for manufacture of Excisable Goods) Rules, 2001.

Analysis:
1. The appeal was filed by the Revenue challenging the Commissioner (Appeals) order setting aside the order-in-original confirming differential duty on a valuation issue and denying credit under Rule 9 (1) (b) of Cenvat Credit Rules, 2004. The Revenue alleged suppression and mis-declaration regarding the revision of price of goods received under Rule 19 (2) of Central Excise Rules, 2002. The Commissioner (Appeals) set aside the notice on grounds of limitation and merits.

2. The Revenue argued that the appellant was aware of the price revision but paid duty only after audit intervention, indicating an intent to evade duty. They contended that availing credit on supplementary invoices for goods already sold is invalid under Rule 9 (1) (b) of Cenvat Credit Rules due to alleged suppression. The respondent disputed these claims, stating that duty was paid for received materials under Rule 6 of the Central Excise Rules, not for materials sold.

3. The respondent's counsel argued that the duty was paid for goods received, as per Rule 6 of the Central Excise Rules, and not for goods cleared. They emphasized that the duty was discharged promptly upon receiving supplementary invoices, demonstrating no intention to evade duty. The Tribunal analyzed Rule 6, clarifying that duty under the rule pertains to goods received by the manufacturer, entitling them to credit.

4. The Tribunal upheld the Commissioner (Appeals) decision, noting that the demand for duty was based on a misunderstanding that it was not paid on inputs but on finished goods. The Tribunal found no evidence of diversion of goods for other purposes and dismissed the appeal, affirming the setting aside of the demand for disputed duty.

5. The judgment emphasizes the distinction between duty paid on received goods under Rule 6 and the availability of credit for such duty. It highlights the importance of compliance with excise rules and procedures, ultimately leading to the dismissal of the appeal against the order-in-original.

This comprehensive analysis delves into the core issues raised in the judgment, providing a detailed breakdown of the arguments presented by both parties and the Tribunal's reasoning in arriving at its decision.

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