2009 (6) TMI 534 - AT - Central Excise

Demand- supplementary invoice- the appellants are manufacturers of Iron Ore Pellets and the appellants are clearing the same on payment of duty after availment of Cenvat credit on inputs as well as capital goods. The appellants are clearing their final products to their sister concern on payment of duty by following the provisions of Rule 8 of the Central Excise (Valuation) Rules, 2000 for valuation of the goods cleared. On scrutiny of the said monthly returns, Revenue authorities felt that during the period April 2006 to August, 2006, the appellant did not have sufficient balance to debit this amount. Hence, it appeared that the Cenvat credit accrued by them during the month of November, 2006 cannot be utilized by them for discharge of duty liability on the supplementary invoices raised. Coming to such a conclusion a Show Cause Notice was issued for the demand of differential. The Adjudicating Authority confirmed the differential duty, confirmed the demand. Held that- the impugned order is not sustainable and is liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any.

Summary

The appellate tribunal CESTAT, Bangalore, consisting of S/Shri T.K. Jayaraman and M.V. Ravindran, heard an appeal against an Order-in-Original from May 2008. The case involved a dispute regarding the utilization of Cenvat credit by manufacturers of Iron Ore Pellets. The appellants cleared final products to their sister concern based on a certain price, but after a price increase, they raised supplementary invoices in November 2006, leading to a demand for differential duty. The Revenue authorities alleged that the appellants did not have sufficient balance to debit the amount of duty payable during April to August 2006. The Adjudicating Authority confirmed the differential duty and interest but did not impose a penalty.

The appellant argued that the differential duty liability arose only in November 2006 and cited Rule 3(4) of Cenvat Credit Rules, 2004, which allows the utilization of Cenvat credit for the payment of any excise duty on a final product. The J Adjudicating Authority, however, concluded that the appellants violated the Central Excise Rules by using Cenvat credit accrued in November 2006 to pay duty liability from April 2006. The tribunal examined the case, finding that the duty liability arose due to a revision in the cost of production, crystallizing in November 2006. The supplementary invoices issued in November 2006 were deemed to be for the differential duty, which the appellants had sufficient credit to discharge. The tribunal referenced a High Court judgment to support its decision.

Ultimately, the tribunal deemed the impugned order unsustainable and allowed the appeal, setting aside the original order. The decision was pronounced on June 30, 2009.