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2018 (3) TMI 13 - AT - Central ExciseCENVAT credit - credit on Aluminum extruded Profiles availed on the basis of five invoices issued by the Silverline Metals, Bhavnagar, though they have received Aluminum scrap - Held that - the appellant had received Aluminum Extruded Profiles which is considered by than as Aluminum waste and scrap as consumption in the factory premises is not being disputed - the confirmation of the demand of cenvat credit as ineligibly availed is incorrect and unsustainable. Penalties u/r 26(2) of the CER, 2002 - Held that - violation if any took place during the period March 2006 to Oct 2006 - provisions of Rule 26(2) can be invoked only after 1.3.2007 for imposing of penalties - penalties set aside. Appeal allowed - decided in favor of appellant.
Issues:
Appeal against denial of Cenvat credit on Aluminum extruded profiles; Allegation of misdirected case by Revenue; Time-barred show cause notice; Appellant's submission of using profiles for manufacturing Aluminum alloy; Allegation of only paper credit and incorrect imposition of penalties; Dispute over nature of goods received as scrap or profiles; Analysis of invoices and value comparison; Possibility of using damaged profiles for manufacturing; Conclusion on eligibility of Cenvat credit; Setting aside of impugned order and penalties. Issue 1: Denial of Cenvat Credit The main issue in this case revolves around the denial of Cenvat credit to the main appellant based on the alleged improper utilization of Aluminum extruded profiles purchased from a scrap dealer. The Revenue contended that the profiles were not received as claimed by the appellant, leading to the denial of credit. The appellant argued that the profiles were used for manufacturing Aluminum alloy, supported by documentation and accounting entries. The Tribunal analyzed the nature of the goods received and concluded that damaged Aluminum extruded profiles could be considered as scrap suitable for the appellant's manufacturing process. The Tribunal ultimately held that the denial of Cenvat credit was incorrect and unsustainable, setting aside the impugned order and allowing the appeal. Issue 2: Allegation of Paper Credit and Penalties Another significant issue raised was the allegation of 'paper credit' and the incorrect imposition of penalties on the appellants. The appellant and other parties argued that penalties imposed under Rule 26(2) of the CER, 2002 were not applicable for the period in question, citing relevant court decisions. The Tribunal agreed with this argument, setting aside the penalties imposed on the other appellants based on the incorrect application of the penalty provision. The Tribunal's decision was supported by legal precedents and statutory interpretation, leading to the setting aside of penalties. Issue 3: Nature of Goods Received and Value Comparison A crucial aspect of the case was the dispute over the nature of the goods received by the appellant from the scrap dealer. The invoices indicated Aluminum extruded profiles, while the appellant claimed to have received damaged profiles suitable for their manufacturing process. The Tribunal meticulously analyzed the invoices, value comparisons, and the technical feasibility of using damaged profiles for manufacturing Aluminum ingots. By considering the pricing, market norms, and technical aspects, the Tribunal concluded that the goods received were indeed suitable for the appellant's manufacturing process, supporting the appellant's contention and overturning the denial of Cenvat credit. Conclusion: The judgment by the Appellate Tribunal CESTAT Ahmedabad addressed multiple issues raised in the appeal against the denial of Cenvat credit and imposition of penalties. Through a detailed analysis of the facts, arguments presented, and relevant legal provisions, the Tribunal ruled in favor of the main appellant, setting aside the denial of credit and penalties imposed on other parties. The decision highlighted the importance of accurate assessment of goods received, proper utilization of credits, and adherence to penalty provisions as per statutory requirements.
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