2010 (3) TMI 607 - AT - Central Excise

Cenvat Credit of service tax- Input Service Toilet and water are basic requirements to run factory and not providing such facilities affect production. Housekeeping service essential and related to manufacture. Held that adjudicating authority in appellant s own case held credit as admissible on impugned service. No plant can run without proper maintenance of plant housekeeping service. Credit admissible. Factory garden maintenance credit on service tax on garden maintenance admissible. Credit on insurance of company vehicles and tours and travels held that documents not provided and matter remanded to adjudicating authority to allow credit on insurance and tour and travel services if examination shows services provided to vehicles used by company or its employees.

Summary

Issues:
1. Demand confirmation and penalty imposition under the Central Excise Act.
2. Applicability of the Compounded Levy Scheme and duty payment.
3. Interpretation of Board Circular No. 522/18/2000.
4. Entitlement to input credit for duty paid on inputs.

Analysis:

1. The appeal was filed against an order confirming a demand of Rs. 11,92,911/- and imposing a penalty of Rs. 1.00 Lakh under the Central Excise Act. The appellants were previously paying duty on actual production under the Compounded Levy Scheme, which ended on 31-3-2000. Post the scheme lapse, the appellants cleared goods at a fixed duty rate of Rs. 750/- per MT. The Revenue contended that duty should be paid at the tariff rate after the scheme's expiration.

2. The adjudicating authority upheld the demand and penalty. The appellants cited Board Circular No. 522/18/2000, stating that finished goods as of 1-4-2000 should be considered duty paid. They argued for duty payment equal to the pre-1-4-2000 rate or credit for inputs used in manufacturing the goods. The Revenue argued that the circular applied to lump sum duty payers, not those paying based on actual production, and input credit could be claimed with proper documentation.

3. The Tribunal found the Circular dated 31-3-2000 inapplicable to the appellants as they were not paying duty based on annual furnace capacity. Therefore, the Circular did not cover their situation, upholding the impugned order. However, the Tribunal acknowledged the appellant's entitlement to input credit for duty paid on relevant inputs, provided proper duty paying documents were produced.

4. In conclusion, the Tribunal dismissed the appeal, finding no fault in the impugned order regarding duty payment post the Compounded Levy Scheme lapse. The appellants were granted input credit for duty paid on inputs used in the goods in question, subject to the submission of necessary documentation. The judgment was pronounced in open court by the Tribunal.