2017 (12) TMI 545 - AT - Central Excise

Penalty and interest - It was claimed that the said goods were manufactured by the appellant with more than 25% by weight of blast furnace slag so the rate of duty comes to NIL - Held that - the dutiability of the goods manufactured by the appellant was in dispute and hence the assessee cannot be held liable for availing cenvat credit as a precautionary measure - the cenvat credit availed also stands reversed - interest will be chargeable in respect of credits utilised by the appellant before its reversal - penalty set aside - appeal allowed in part.

Summary

Issues involved:
1. Classification under Central Excise Tariff Act for manufacturing rockwool, slag wool, and related articles.
2. Availment and reversal of cenvat credit.
3. Imposition of penalty and interest by the department.
4. Interpretation of dutiability of manufactured goods.
5. Application of exemption Notification No.5/98-CE.

Classification under Central Excise Tariff Act:
The appellant claimed classification under Central Excise Tariff 6807.10 for manufacturing rockwool, slag wool, and related articles with more than 25% blast furnace slag weight. The department allowed the claim but levied penalty and interest. The issue was whether the goods manufactured fell under the specified classification. The Tribunal noted that the dutiability of the goods was disputed, and the appellant reversed the cenvat credit availed as a precautionary measure. The Tribunal held that the appellant cannot be held liable for availing cenvat credit in such circumstances.

Availment and reversal of cenvat credit:
The appellant had initially availed cenvat credit, which was later reversed following a decision by the Supreme Court. The lower authorities imposed interest on the credit utilized before its reversal. The Tribunal agreed that interest would be chargeable for credits utilized before reversal. However, considering the long-standing dispute on dutiability, the Tribunal found no justification for imposing a penalty on the appellant and hence set aside the penalty imposed by the lower authorities.

Imposition of penalty and interest by the department:
The department imposed penalty and interest on the appellant for availing cenvat credit before its reversal. The Tribunal held that interest would be chargeable for credits utilized before reversal but set aside the penalty due to the long-pending dispute on dutiability. The Tribunal found no justification for penalizing the appellant under the circumstances.

Interpretation of dutiability of manufactured goods:
The Tribunal examined the dutiability of the goods manufactured by the appellant, which was in dispute during the relevant period. The Tribunal noted that the appellant had reversed the cenvat credit availed as a precautionary measure. Considering the unsettled nature of the dutiability issue, the Tribunal held that the appellant could not be held liable for availing cenvat credit under such circumstances.

Application of exemption Notification No.5/98-CE:
The Tribunal referred to exemption Notification No.5/98-CE and other succeeding notifications that extended benefits to the appellant. The Tribunal observed that the dutiability of the goods was in dispute, and the appellant had reversed the cenvat credit availed. Consequently, the Tribunal allowed the appeal partially, modifying the impugned order by setting aside the penalty imposed by the lower authorities.

This comprehensive analysis of the judgment addresses the issues involved in the appeal before the Appellate Tribunal CESTAT NEW DELHI, providing detailed insights into the classification, cenvat credit, penalty, dutiability, and application of exemption notifications in the case.