2010 (3) TMI 459 - AT - Central Excise

Cenvat Credit- Limitation- the Revenue is that the appellants were clearing the inputs as such. Therefore, the appellants are required to reverse the credit availed on such inputs and not at the transaction value which is lower than the price on which the appellants are receiving the HR Coils. Held that- H.R. Coils underwent process which did not amount to manufacture and were cleared under same tariff heading in which they were received. Since they were cleared as such, assessee was liable to reverse credit equal to that availed at time of their receipt in factory.

Summary

Issues:
Appeal against demand confirmation invoking extended period of limitation and penalty imposition under Section 11AC of the Central Excise Act for availing credit on HR Sheets used in manufacturing finished goods and clearing rejected inputs.

Analysis:
1. Demand Confirmation and Penalty Imposition:
The appellant appealed against the demand of Rs. 67,42,153.00 and penalty under Section 11AC of the Central Excise Act, contending that rejected inputs were cleared at lower prices after certain processing, justifying duty payment based on transaction value at clearance. The Revenue argued that the appellants cleared inputs as such, requiring reversal of credit availed. The Tribunal found that the appellants received HR Coils, processed them without amounting to manufacture, and cleared rejects under the same Tariff Heading, holding them liable to reverse credit equal to that availed at receipt, upholding the demand and penalty.

2. Time Barred Demand:
Regarding the time limitation issue, the show-cause notice was issued on 4-5-2005 for duty demand from April 2002 to March 2005, alleging suppression of facts. The appellants argued that they regularly submitted documents with monthly returns, negating the suppression claim. The Tribunal agreed, deeming the suppression allegation unsustainable and setting aside the demand beyond the normal limitation period, requiring a recalculation of the demand for the normal period with interest.

3. Penalty Imposition:
The penalty under Section 11AC of the Central Excise Act was set aside as the Tribunal found the suppression allegation unsubstantiated, aligning with the decision to dismiss the demand beyond the normal limitation period. The Tribunal concluded the appeal by disposing it off in accordance with the decisions on demand, time limitation, and penalty, favoring the appellant on the latter two issues.