2009 (11) TMI 323 - AT - Central Excise

Cenvat Credit- Supplementary invoice- the appeal against the order of the Commissioner (Appeals) upholding the confirmation of demand and interest and reducing penalty to Rs. 10,000/-. The demand arises as a result of holding that the assessees are not entitled to take Cenvat credit paid under supplementary invoice issued by a manufacturer of inputs for the reason that the additional amount became recoverable by reason of suppression of facts with intention to evade payment of duty. - held that- the assessee cannot be held to be guilty of clandestine clearance of dough cannot be accepted as it is not relevant for the purpose of deciding whether the assessees removed dough clandestinely from one unit of theirs to another, which fact has been admitted by them before the Settlement Commission. In view of the above, I uphold the impugned order and reject the appeal.

Summary

Issues:
1. Entitlement to Cenvat credit under Rule 9(b) of Cenvat Credit Rules, 2004.
2. Application of notification under Section 11C dated 18-8-09.
3. Allegations of clandestine removal of goods.

Analysis:

Entitlement to Cenvat credit under Rule 9(b) of Cenvat Credit Rules, 2004:
The appeal was against the Commissioner (Appeals) order confirming demand, interest, and reducing penalty. The issue revolved around the assessees' entitlement to Cenvat credit paid under a supplementary invoice issued by a manufacturer of inputs. The demand arose due to the assessees not being eligible for Cenvat credit as the additional amount became recoverable because of suppression of facts with the intention to evade duty. The assessees had admitted before the Settlement Commission that the removal of 'dough' without duty payment was due to suppression, as recorded in the adjudication order. The Settlement Commission also found the assessee's contention of non-intention to evade payment of duty unconvincing. Consequently, Rule 9(b) of the Cenvat Credit Rules, 2004 was deemed applicable, making the assessees ineligible for Cenvat credit.

Application of notification under Section 11C dated 18-8-09:
The consultant argued that a notification under Section 11C dated 18-8-09 covering 'dough' for bakery wares and the period in dispute should absolve the assessee of clandestine clearance allegations. However, the Tribunal rejected this argument, stating that the notification's relevance does not affect the fact that the assessees admitted to clandestinely removing 'dough' from one unit to another before the Settlement Commission. Therefore, the notification did not impact the decision regarding the clandestine removal of goods.

Allegations of clandestine removal of goods:
Ultimately, the Tribunal upheld the impugned order and dismissed the appeal. The decision was based on the assessees' admission of clandestine removal of 'dough' and the Settlement Commission's findings regarding the intention to evade payment of duty. The Tribunal's decision reinforced the ineligibility of the assessees to claim Cenvat credit under Rule 9(b) of the Cenvat Credit Rules, 2004.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal and the rationale behind the decision, emphasizing the legal implications of the case.