2007 (12) TMI 114 - AT - Central Excise

Credit denied on holograms on the ground that the same are not used in or in relation to mfg. of final product (ball and rolling bearing) - after availing the credit on holograms, they were cleared without reversing the credit to packing material supplier packing material supplier supplies packing material to appellant on payment of duty in this case clearance of holograms (inputs) will be treated as clearance of input as such, therefore credit is deniable penalty is justified

Summary

Issues: Denial of credit for holograms and imposition of penalties.

Analysis:
- The appellant appealed against the denial of credit for holograms and imposition of penalties.
- The show-cause notice was issued due to the holograms not being used in or in relation to the manufacture of the final product.
- The appellant, engaged in manufacturing ball and roller bearings, received duty-paid holograms from M/s Raheja Packing (P) Ltd.
- Revenue argued that the holograms were not used in the manufacture of ball and roller bearings, thus not eligible for credit.
- The appellant's defense was that after availing credit for holograms, they were cleared to M/s Raheja Packing (P) Ltd., who used them in manufacturing packing material.
- The packing material, including the holograms' cost, was used by the appellant in manufacturing the final product, which was cleared on payment of duty.
- The Tribunal found that the holograms were not used by the appellant in manufacturing their final product but were sent to another manufacturer without reversing the credit.
- As the holograms were not used as claimed by the appellant and were cleared to another manufacturer, the Tribunal upheld the denial of credit and imposition of penalties, rejecting the appeal.