2009 (7) TMI 965 - AT - Central Excise

Summary

Issues involved: Admissibility of Cenvat credit, demand for Central Excise duty on goods cleared between units, imposition of penalty.

Admissibility of Cenvat credit:
The case involved M/s. Nabros Pharma Pvt. Ltd., engaged in manufacturing bulk drugs and P&P Medicaments with two Units. Unit-2 had transferred Tooth Pastes and Cosmetics to Unit-1, and Unit-1 availed Cenvat credit. The dispute arose regarding the admissibility of this credit amounting to Rs. 2,79,364/-. The impugned order confirmed the demand for Cenvat credit on the grounds of inadmissibility.

Demand for Central Excise duty on goods cleared between units:
Unit-1 had cleared excisable goods under delivery challans without preparing invoices or paying excise duty, amounting to Rs. 3,21,731/-. The issue was whether the duty was payable on these goods cleared by Unit-1 to Unit-2. The appellant argued that the goods were semi-finished and used in Unit-2 for manufacturing finished goods, which were ultimately cleared with duty payment. The contention was that the situation was revenue-neutral, and thus, duty demand and penalty should be set aside.

Imposition of penalty:
The Tribunal considered the submissions from both sides. It was noted that there were no clear findings by the lower authorities regarding the appellant's claims. The Tribunal accepted the argument of revenue neutrality due to the absence of evidence showing intention to evade duty payment. The extended period was deemed not applicable, leading to the setting aside of duty demands. However, penalties were imposed under Rule 15(2) of Cenvat Credit Rules and Rule 25 of Central Excise Rules, 2002, for contravention of provisions. The penalties on M/s. Nabros Pharma Pvt. Ltd. were reduced to Rs. 15,000/- and Rs. 10,000/- under the respective rules. Additionally, penalties on individuals were also reduced. The appeals were disposed of accordingly.