2017 (12) TMI 765 - AT - Central Excise

CENVAT credit - appellant have received copper, free of charge, from M/s. Enercon (I) Ltd. and manufactured certain components and cleared the same without payment of excise duty by availing the exemption under N/N. 6/2002 dated 1.3.2002 - case of Revenue is that CENVAT credit of about ₹ 95 lakhs availed by them was irregular inasmuch as the copper was meant to be used exclusively in the manufacture of exempted goods - Held that - CENVAT credit has been availed on copper which has been received by the assessee and meant exclusively for use in the manufacture of exempted products. Since this fact has not been specifically brought to the notice of the Department - demand upheld - appeal allowed - decided in favor of Revenue.

Issues:
1. Denial of CENVAT credit on inputs used in the manufacture of exempted final product.
2. Appropriation of irregularly availed CENVAT credit.
3. Imposition of penalty under Rule 15(2) read with Section 11AC of the Central Excise Act.
4. Allegations of suppression by the assessee.

Analysis:
1. The appeal involved a dispute regarding the denial of CENVAT credit on inputs used in the manufacture of exempted final products. The appellant, engaged in manufacturing insulated copper strips and other products, availed CENVAT credit on copper supplied free of cost by another entity for manufacturing pole shoes. The Department contended that since the copper was used exclusively in exempted product manufacturing, the appellant was not entitled to the credit. The adjudicating authority confirmed the demand for irregularly availed credit but allowed appropriation from the amount already reversed by the appellant under Rule 6(3)(b) of CENVAT Credit Rules, 2004. The Tribunal upheld this decision, stating that the appellant would be entitled to a refund/re-credit of the balance amount after deducting the irregularly availed credit.

2. The appellant, in a Cross Objection, argued that they had already reversed 10% of the value of exempted products cleared and an additional amount during a subsequent period. They contended that since no penalty was imposed for suppression by the adjudicating authority, the entire demand should be set aside. However, the Tribunal rejected this argument, emphasizing that CENVAT credit was irregularly availed on copper meant exclusively for exempted products, justifying the demand upheld by the adjudicating authority.

3. The Tribunal noted that the Department's view that the irregularly availed CENVAT credit was about ?95 lakhs was valid, as the appellant had not specifically informed the Department about the nature of the copper usage. Consequently, the Tribunal rejected the argument of no suppression and upheld the demand for the irregularly availed credit.

4. Ultimately, the Tribunal found no fault in the impugned order and dismissed the appeal filed by the Department, affirming the decision of the lower authority. The Cross Objection was also disposed of in line with the decision on the main appeal, with the Tribunal upholding the demand for irregularly availed CENVAT credit and ordering the refund/re-credit of the balance amount after deduction.

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