2010 (4) TMI 466 - AT - Central Excise

Cenvat - Input Removed as such - the respondents that these DG sets were used as inputs for manufacturing DG sets mounted on trailers and in some cases control panels and batteries were also provided leading to value addition. Held that - DG sets cleared as such for which assessee was at the most required to reverse credit taken, whereas they paid higher duty on transaction. Value. Demand against assessee not sustainable.

Summary

Issues: Duty demand on DG sets, payment of interest, levy of penalty

Duty Demand on DG Sets:
The case involved the respondents purchasing DG sets from their own units and claiming to have paid duty on a higher value than the credit taken on the DG sets. The respondents argued that they had added value to the DG sets through manufacturing activities, leading to value addition. The Tribunal found that the respondents had indeed paid more duty than the credit taken on the DG sets received by them. It was noted that in most cases, the respondents had added value to the DG sets by manufacturing DG sets mounted on trailers and adding other accessories. In cases where the DG sets were cleared as such, the Tribunal stated that the respondents were only required to reverse the credit taken, but they had paid higher amounts on the transaction value for such DG sets. Consequently, the Tribunal held that there was no basis for duty demand on the respondents.

Payment of Interest:
The Tribunal also addressed the issue of payment of interest. It was observed that since the respondents had paid more duty than the credit taken, there was no justification for demanding any further payment from them. The Tribunal emphasized that the respondents had already paid higher amounts on the transaction value of the DG sets, which exceeded the credit taken. Therefore, the Tribunal concluded that there was no case for the payment of interest by the respondents.

Levy of Penalty:
Regarding the levy of penalty, the Tribunal reiterated that since the respondents had paid more duty than the credit taken and had already paid higher amounts on the transaction value of the DG sets, there was no basis for imposing any penalty on them. The Tribunal highlighted that the duty demand had been dropped by the adjudicating authority, and there was no valid reason for the imposition of any penalty. Consequently, the Tribunal dismissed the Department's appeal and disposed of the cross-objections, upholding the impugned order passed by the lower appellate authority. The judgment emphasized that there was no requirement for any duty demand, payment of interest, or levy of penalty on the respondents based on the reasons stated in the analysis.