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2018 (9) TMI 1058 - AT - Central ExciseCENVAT Credit - Job work - Scope of SCN - common inputs (furnace oil) used in manufacture of both dutiable and exempted goods - non-maintenance of separate records - Rule 6 of Cenvat Credit Rules - Held that - The adjudicating authorities have gone beyond the scope of the SCNs. The adjudicating authorities have surely changed the goal post to a proposition which was not at all presented in the SCNs. On this very ground, the impugned orders will suffer from infirmity of having gone beyond the scope of SCNs - impugned orders do not sustain. Also, the matter is amply covered by the Tribunal in Federal Mogul Goetze India Ltd. Vs CCE Bangalore 2012 (7) TMI 713 - CESTAT, BANGALORE where inter alia, it was held that N/N. 214/86-CE, though issued under Section 5A of Central Excise Act, 1944, is not per se an exemption notification. Impugned orders cannot sustain - appeal allowed - decided in favor of appellant.
Issues:
- Dispute over availing cenvat credit on furnace oil used for manufacturing goods under job work basis. - Allegations of irregular cenvat credit availed leading to demand, interest, and penalties. - Interpretation of Notification No.214/86-CE and its applicability to job work goods. - Imposition of penalties on the appellant. - Scope of show cause notices (SCNs) and adjudicating authorities' decisions. Analysis: 1. Dispute over Cenvat Credit on Furnace Oil: The appellants, engaged in manufacturing Hot Rolled Steel Products, availed cenvat credit on furnace oil used for reheating ingots/billets. The dispute arose as the department alleged that the appellants availed credit on furnace oil used for both dutiable and exempted goods. The department demanded irregularly taken cenvat credit amounts, leading to show cause notices and penalties. 2. Interpretation of Notification No.214/86-CE: The crux of the matter revolved around the interpretation of Notification No.214/86-CE. The appellants argued that the goods manufactured under job work basis were exempted goods under the notification. However, the adjudicating authority held that the appellants, as job workers, were not the manufacturers of final products, thus disallowing the credit on furnace oil used for job work goods. 3. Penalties Imposition: The appellants contended that penalties imposed were unjustified as there was no intent to evade duty payment. They believed they were eligible for cenvat credit in good faith. The department supported the penalties, emphasizing the necessity to comply with Cenvat Credit Rules. 4. Scope of Show Cause Notices and Adjudication: The appellants argued that the demands in the impugned orders differed from the grounds in the show cause notices. They contended that the authorities went beyond the scope of SCNs by changing the basis of demand. The Tribunal agreed with the appellants, citing various precedents and held that the impugned orders were unsustainable. 5. Judicial Precedents and Tribunal Decisions: The Tribunal referred to past judgments, such as Federal Mogul Goetze India Ltd. Vs CCE Bangalore, to support its decision. It highlighted that Notification No.214/86-CE does not unconditionally exempt goods but shifts the duty payment liability to the principal manufacturer. The Tribunal also cited Sterlite Industries (I) Ltd. Vs CCE Pune to reinforce the appellants' argument regarding cenvat credit on inputs used in the final product. In conclusion, the Tribunal allowed all appeals, setting aside the impugned orders. The decision was based on the interpretation of Notification No.214/86-CE, the scope of show cause notices, and the applicability of cenvat credit rules to job work goods. The judgment emphasized the importance of maintaining clarity and consistency in demands raised through show cause notices.
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