2006 (6) TMI 14 - AT - Central Excise

Central Excise - Cenvat credit - Moulds - Appellant paid duty equal to the amount of the credit taken - Demand of duty is not justified

Summary

Issues:
Interpretation of appropriate duty under Rule 57AB(b) for clearance of input or capital goods.

Detailed Analysis:
The appellants, engaged in manufacturing motor vehicle parts, required steel moulds either received from customers with duty paid documents or manufactured in their own factory. The moulds were cleared on payment of duty equal to modvat taken, but a Show Cause Notice demanded duty at prevailing rates during a specific period. The Deputy Commissioner confirmed this duty, which was upheld in appeal.

The learned Advocate argued that "appropriate duty" should be equivalent to the credit taken at the time of input receipt, citing precedents like Commissioner of C.Ex. Vs. Asia Brown Boveri Ltd. and Collector of Central Excise vs. American Auto service. Referring to the case of Ejcher Tractors vs. Commissioner of Central Excise, Jaipur, it was contended that Rule 3(5) of the Cenvat Credit Rules 2005 should govern the assessable value, allowing clearance by paying an amount equal to the credit availed.

The Tribunal considered the submissions and found the case aligned with the decision in Eicher Tractors, which held that once duty equal to the credit taken is paid, no further demand is justified. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief. The judgment was pronounced on 12.6.2006.