2016 (6) TMI 1010 - AT - Central Excise

Cenvat Credit - reversal of credit on consumable goods - Held that - The impugned order records the assertion that the appellant had consumed the said consumables within the factory for fabricating items and paid duty on such fabricated items. The impugned order does not deal with this issue at all. If the appellants have used within the factory for manufacture of fabricated items and paid duty thereon, they would be entitled to credit. - Matter remanded back for verification - Decided partly in favor of assessee.

Summary

Issues:
1. Reversal of Modvat credit on various items cleared by the appellant.
2. Demand of reversal of credit on consumable goods.
3. Penalty imposition on the Managing Director.

Analysis:
1. The appellant, a manufacturer of sugar plant machinery, faced a notice seeking reversal of Modvat credit on goods cleared without credit reversal, gas and electrodes issued to fabricators, and clearances of bearings. The appellant admitted the liability for bearings but argued against reversal for other items due to not availing credit. The Deputy Commissioner's report supported the appellant's claim of not taking credit on certain items. The Tribunal found the impugned order unsustainable for not addressing the appellant's assertion, setting it aside for specific findings on items not credited.

2. Regarding the demand for reversal of credit on consumable goods, the impugned order confirmed the demand based on goods removed without duty payment. The appellant contended that consumables were used for fabrication within the factory, and duty was paid on fabricated items. The impugned order failed to address this issue. The Tribunal set aside the order concerning credit on consumables, remanding it for clear findings on the usage within the factory.

3. The Tribunal upheld the demand of duty on the admitted bearings but found the penalty of ?10,000 imposed on the Managing Director unjustified. The show-cause notice did not specify the Managing Director's role, leading to the penalty being set aside. The appeal was partly allowed with the above determinations.