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TMI Blog2016 (9) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... ically informed about the extent of damage of the inputs on which CENVAT Credit availed, and as such lying in stock destroyed in fire. It is not out of place to assume that the Appellant had informed the extent of damage of finished goods on 07th April 2006 when they filed remission application of the duty involved on the finished goods. The details of inputs destroyed in fire were furnished in May 2006. Therefore, the ld.Commissioner is right in considering that the demand is within the normal period of limitation of one year prescribed under sec. 11A being issued in Feb.2007. Demand of interest - amount paid by the appellant - Held that:- it is found that the decision relied upon by the appellant was rendered relying upon the Division Bench judgment of the Tribunal in the case of Fleet Industries Vs CCE [2008 (8) TMI 317 - CESTAT, AHMEDABAD], in observing that Section 11AB would apply only to the cases of non-levy or short-levy of excise duty by non-payment of duty by the due date and not applicable to the inputs destroyed. We find that the said reasoning of the Tribunal did not find support from Hon'ble Gujarat High Court in the case of CCE Vs Fleet Industries [2010 (12) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CENVAT Credit of ₹ 57,52,000/- on the inputs/raw materials, ₹ 66,39,000/- on the inputs contained in WIP goods and ₹ 5,85,000/- on inputs contained in the finished goods. On adjudication, demand of ₹ 5,85,000/- was dropped and recovery of credit on inputs i.e. ₹ 57,52,000/- and inputs contained in semi-finished goods i.e. ₹ 66,39,000/- were confirmed and penalty of ₹ 10.00 lakhs was imposed under Rule 15(1) of CENVAT Credit Rules 2004. Aggrieved by the said order, the present appeal is filed. 3. The learned Advocate Shri Anand Nainawati had submitted that there is no dispute of the fact of incident of fire in the factory on 07.12.2005 and necessary intimation of fire was furnished to the Department. It is his contention that a conjoint reading of Rule 3 and Rule 2(k) of CENVAT Credit Rules 2004, it is clear that all those goods that are used in or in relation to the manufacture of final product qualify for credit, hence, the inputs used and contained in WIP goods are eligible to CENVAT Credit. Hence, there is no necessity to reverse the CENVAT Credit on the inputs contained in the WIP destroyed in the fire. In support, the learned Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Golden Polymex India Ltd Vs CCE Patna 2003 (160) ELT 545 (Tri-Kol.). Further, he has submitted that the inputs contained in WIP goods destroyed in fire also not eligible to credit as the same cannot be said to be used in or in relation to manufacture of final product. It is his argument that the manufacture of final product would include the entire process undertaken by the manufacturer in converting the raw material into finished goods, and till the final product emerges, the credit on inputs cannot be held to be admissible. Further, he has submitted that from the copy of letter dt.02.02.2008 addressed to the insurance company, it is clear that they had lodged their claim on the semi-finished goods and also the claim of excise duty involved on raw material destroyed in fire, as the Appellants are not entitled to claim dual benefit. Further, rebutting the argument of the Appellant that the demand is barred by limitation, the learned Authorized Representative for the Revenue submitted that incident of fire occurred on 07.12.2005 but the Appellant with all particulars about the destruction intimated the Department only on 02.05.2006, after filing the remission application finish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 85 of Finance Act, 2005 (18 of 2005). paid on (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004, including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.214/86-Central Excise, dated the 25th March, 1986, published in Gazette of India vide number G.S.R. 547(E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004. 8. The Hon'ble Bombay High Court in the case of Asian Paints India Ltd case (supra), has been confronted with the question whether the CENVAT Credit availed on the inputs used for manufacture of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 7. As regards the reversal of credit in respect of the inputs which were lying in the appellants factory unutilised and got destroyed in the fire, it is seen that the said inputs were admittedly neither used in the manufacture of the final product, nor even issued for the manufacture. They were lying as such in the appellants premises. The Modvat credit on the inputs is available only when the inputs are used in or in relation to the manufacture of the final product. In the present case they cannot even be said to have been used in relation to the manufacture of the final product, or can be said to have been destroyed during the manufacture of the final product, inasmuch as the same were admittedly not even issued for the manufacture. The appellants reliance upon the larger Bench decision in the case of Ashoke Iron is not appropriate inasmuch as the decision was given in the different set of facts and circumstances. The inputs were received by the appellants in that case, and were admittedly used in the manufacture of the final product, though no duty was paid on the final product. As such the facts and circumstances of that decision are distinguishable from the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due date and not applicable to the inputs destroyed. We find that the said reasoning of the Tribunal did not find support from Hon'ble Gujarat High Court in the case of CCE Vs Fleet Industries 2011 (264) ELT 349 (Guj). Hence, appropriate interest is payable on the credit amount i.e. ₹ 57,52,000/- reversed by the Appellant. 14. On the aspect of imposition of penalty imposed under Rule 15(1) of Cenvat Credit Rules, 2004, we are of the view that the inputs lying in stock were destroyed in fire and the CENVAT credit involved, on such destruction, was required to be reversed since it was not used in or in relation to the manufacture of finished goods, the purpose for which it was procured and credit availed. It is observed that though the fire took place on 07.12.2005, the Preventive Officers during their visit on 09.03.2006 noticed that the appellants had not reversed the CENVAT credit. It is also observed that the appellants had filed remission application only on 07.04.2006. In view of the same, penalty is imposable under Rule 15(1) of the Cenvat Credit Rules, 2004 for contravention of any of the provisions of the said rules which invites liability to penalty under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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