2015 (10) TMI 1787 - AT - Central Excise

Denial of CENVAT Credit - Manufacture - activity of printed bottles does - Held that - Admitted facts are that the final products have been cleared from the appellants factory prior to 3-8-1998 to their godown. It is also an admitted fact that these goods have been cleared from their godown on payment of duty which was not required to pay by the appellants. In these circumstances, relying on the decision in the case of Ajinkya Enterprises (2012 (7) TMI 141 - BOMBAY HIGH COURT) we are of the considered view that as duty has been paid by the appellants on clearance of these final products which was not required to pay shall amount to reversal of Cenvat credit which sought to deny by way of impugned order. In these circumstances, we hold that the demand confirmed by way of impugned order is not sustainable. Accordingly, levy of interest and penalties are also not sustainable - Decided in favour of assessee.

Summary

Issues:
Transitional credit denial, interest and penalties imposition, excise duty levy on printed glass bottles, declaration under Central Excise Rules, 1944, clearance of finished goods, entitlement to Cenvat credit on inputs, reversal of credit, refund claim.

Transitional Credit Denial:
The main issue in this case revolves around the denial of transitional credit to the appellants. The appellants were engaged in printing glass bottles, and the excise duty on this activity came into effect from a specific date. The dispute arose regarding the transitional credit on inputs that went into the manufacture of finished goods cleared after the levy of excise duty. The Revenue contended that since the finished goods were cleared before the duty imposition date, the appellants were not entitled to take Cenvat credit on the inputs.

Excise Duty Levy and Declaration:
The case involved the levy of excise duty on printing glass bottles and the appellants' compliance with the declaration requirements under Rule 57G and 57H of the Central Excise Rules, 1944. The appellants had filed declarations for the stocks of printed bottles in their factory and godown. The dispute arose due to the clearance of finished goods from the godown before the duty imposition date and the subsequent claim for transitional credit on inputs.

Entitlement to Cenvat Credit:
The core argument presented by the appellants was based on Rule 57H of the Central Excise Rules, 1944, asserting their entitlement to take transitional credit on inputs used in the manufacture of finished goods cleared after the duty imposition date. The appellants argued that the duty paid on the goods cleared before the duty imposition date should be considered as a reversal of Cenvat credit, as per the decision in the case of Ajinkya Enterprises.

Decision and Ruling:
After considering the submissions from both sides, the Tribunal held that the duty paid by the appellants on the clearance of final products, which was not required to pay, should be treated as a reversal of Cenvat credit. Relying on the precedent set by the case of Ajinkya Enterprises, the Tribunal concluded that the demand for transitional credit denial, interest, and penalties was not sustainable. Therefore, the appeals were allowed, and any consequential relief was granted to the appellants.

This detailed analysis of the judgment highlights the key issues surrounding the denial of transitional credit, excise duty levy, compliance with declaration rules, entitlement to Cenvat credit, and the final ruling by the Tribunal based on the arguments presented by both parties.