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2009 (10) TMI 341 - AT - Central Excise


Issues:
- Appeal against confirmation of duty under Rule 57-I of Central Excise Rules, 1944
- Imposition of penalty and interest at an appropriate rate
- Availing Modvat credit on inputs used in manufacturing exempted goods
- Contravention of Rule 57C of Central Excise Rules, 1944
- Reversal of value of final products under Rule 57CC
- Misdeclaration on export documents regarding Modvat credit
- Applicability of Rule 6(6)(v) of Cenvat Credit Rules, 2004
- Dispute over duty leviability, interest, and penalty
- Interpretation of case laws regarding Modvat credit on exported goods

Analysis:

1. The appeal was filed against the confirmation of duty amount and imposition of penalty and interest under Rule 57-I of the Central Excise Rules, 1944. The appellant had availed Modvat credit on inputs used in manufacturing both dutiable and exempted goods, leading to a dispute regarding the reversal of value under Rule 57CC due to the export of exempted final products without payment of duty.

2. The appellant was found to have misdeclared on export documents regarding the Modvat credit availed on exempted goods. The lower appellate authority confirmed the duty demand, interest, and penalty. The appellant argued that under Rule 6(6)(v) of the Cenvat Credit Rules, 2004, they were entitled to Cenvat credit on inputs used in manufacturing final products for export, regardless of their exemption status.

3. The appellant relied on various case laws to support their contention that Modvat credit should not be denied on inputs used in both dutiable and exempted products when the exempted goods are exported. The appellant emphasized that if duty is not leviable, then interest and penalty should not be imposed.

4. The Revenue contended that the recovery mechanism under Rule 57CC was enforceable against the appellant, citing a specific case law. However, the Tribunal found merit in the appellant's argument, citing the case of Merit Organics Ltd. and Repro India Ltd., which supported the appellant's entitlement to Modvat credit on inputs used in manufacturing exported exempted goods.

5. After careful examination of submissions and case laws, the Tribunal ruled in favor of the appellant, holding that they were entitled to Modvat credit on the inputs used in manufacturing the exempted final products exported. The appeal was allowed, providing consequential relief to the appellant, and the penalty and interest were deemed unsustainable in this context.

6. The judgment was pronounced on 29-10-2009 by Shri Ashok Jindal, Member (J) of the Appellate Tribunal CESTAT, Mumbai.

 

 

 

 

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