2019 (11) TMI 48 - AT - Central Excise

Recovery of the wrongly availed CENVAT Credit - raw material imported on payment of CVD and SAD - Since the disputed goods, i.e., CARTAP was not used for the intended purpose in the factory of manufacture of final product, the department contended that taking of cenvat credit of CVD and SAD paid on such disputed goods is not proper and justified. HELD THAT - It is an admitted fact on record that out of the disputed amount of cenvat credit of ₹ 14,87,490/-, the appellant had paid duty amounting to ₹ 13,26,000/- on the basis of normal transaction value determined by it in terms of Rule 7 of the Central Excise Valuation Rules. The remaining amount of ₹ 1,61,525/- was subsequently reversed from the cenvat account. Thus, the credit availed by the appellant in respect of the raw material dispatched to its sister unit was entirely reversed/paid. Under the circumstances, it cannot be said that the amount of cenvat credit can again be recovered. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Incorrect availing of cenvat credit on imported raw material
- Disputed use of raw material in the manufacturing process
- Adjudication of cenvat demand, interest, and penalty
- Appeal against the Commissioner's decision

Analysis:
1. Incorrect availing of cenvat credit on imported raw material:
The appellant imported CARTAP as raw material for manufacturing pesticides and availed cenvat credit on the duty paid. However, the raw material was not used for the intended purpose in the factory but sent to a sister concern. The department contended that availing cenvat credit on the disputed goods was unjustified, leading to show cause proceedings for recovery under Rule 14 of the Cenvat Credit Rules, 2004.

2. Disputed use of raw material in the manufacturing process:
The appellant had paid duty on the disputed cenvat credit amount and reversed a portion from the cenvat account. The Tribunal noted that the duty payment on the input was accepted by the department, similar to a previous case for a different period. The Tribunal held that since the duty payment was accepted, proceedings for recovery of the cenvat amount cannot be initiated. This decision was crucial in determining the outcome of the case.

3. Adjudication of cenvat demand, interest, and penalty:
The Additional Commissioner of Central Excise confirmed the cenvat demand along with interest and imposed a penalty on the appellant. The Commissioner (Appeals) upheld this decision in the impugned order dated 03.06.2011. However, the Tribunal found no merits in the Commissioner's decision, considering the circumstances and the previous Tribunal order on a similar issue for a different period. Consequently, the Tribunal allowed the appeal filed by the appellant, setting aside the impugned order.

4. Appeal against the Commissioner's decision:
The appellant, dissatisfied with the decision of the Commissioner (Appeals), approached the Tribunal for relief. After thorough consideration of the facts, including the acceptance of duty payment on the input by the department in a similar case, the Tribunal allowed the appeal, thereby overturning the decision of the Commissioner (Appeals). The Tribunal's decision was based on the principles of law and the specific circumstances of the case, leading to a favorable outcome for the appellant.