KRISHNA BARRELS P. LTD. Vs. C.C.E., CUS. (ADJUDICATION), VADODARA-II
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Krishna Barrels P. Ltd.
C.C.E., Cus. (Adjudication), Vadodara -Ii
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(1.)The facts of case, in brief, are that the appellant were engaged in the manufacture of M.S. Drums classifiable under Chapter 73 of the Schedule to the Central Excise Tariff Act, 1985. The appellant had availed benefit of Cenvat credit on the inputs and capital goods used in relation to the manufacture of the final product. A show cause notice dated 22 -6 -2006 was issued proposing demand of duty along with interest and to impose penalty. The Adjudicating Authority confirmed the demand of Cenvat credit of Rs. 18,035.00 along with interest and imposed penalty of equal amount of Cenvat credit on the ground that the appellant availed credit on the rejected inputs/raw -materials, lying in the factory, which could not be put to use in the final product. It has also confirmed the demand of Cenvat credit of Rs. 56,481.00 along with interest on wrongly availed Cenvat credit on outwards freight under GTA Service along with interest and imposed penalty of equal amount. It has also confirmed Central Excise Duty of Rs. 20,814.00 on salvage charges. It has further confirmed demand of Cenvat credit of Rs. 4,63,953.00 along with interest and imposed penalty of equal amount of duty towards differential duty on reversal of rejected final product under Rule 16 of the Central Excise Rules, 2001/2002. By the impugned order, the Commissioner (Appeals) set -aside the penalties in respect of the first and second issue and the demand of duty and penalty on third issue and, otherwise, the Adjudication Authority order was upheld. Learned Advocate on behalf of the appellant submits that the rejected raw -materials were lying in the factory and therefore, there is no reason of reversal of credit as held by the Tribunal in the case of Bharat Heavy Electricals Ltd. v/s. C.C.E., Bangalore -, 2002 (50) R.L.T. 208 (CEGAT -Ban.). He further submits that the denial of Cenvat credit of Rs. 56,035.00 on GTA service is contrary to the decision of the Hon'ble Andhra Pradesh High Court in the case of the Commissioner of Customs and Central Excise, Hyderabad -II v/s. Grey Gold Cements Ltd., 2014 (34) S.T.R. 809 (A.P.). Regarding the last issue, the Learned Advocate submits that the Commissioner (Appeals) proceeded on the basis that no process was undertaken by the appellant, whereas, the finding of the Adjudicating Authority is that the appellant undertaken process on returned goods. So, the appellant has rightly paid duty on the transaction values. It is supported by the decision of the Tribunal in the case of Apollo Tyres Ltd. v/s. CCE, Pune -III -, 2010 -TIOL -549 -CESTAT (Mum.) :, 2011 (272) E.L.T. 84 (Tri. -Mumbai). It is also submitted that the entire demand of duty is barred by limitation and there is no intend to evade payment of duty as the Central Excise Audit Party examined the records and there is no suppression of fact. He further submits that in any case penalty should not be imposed on the last issue.
(2.)On the other hand, the Learned Authorised Representative for the Revenue submits that the appellant had not contested the demand of duty and paid duty on the first and second issue on merits and the Commissioner (Appeals) set -aside penalty on first and second issue. It is further submitted that the appellant had not contested all the issues on merit in the grounds of appeal. He further submits that the appellants paid the duty and they cannot be allowed to contest the issues before this Tribunal. He relied upon the decision of the Tribunal in the case of Chemfab Alkalis Ltd. v/s. CCE, Pondicherry [2010 (251) E.L.T. 264 (Tri. Chennai), in respect of the demand is not barred by limitation. He drew the attention of the Bench the relevant portion of the order.
(3.)After hearing both the sides and on perusal of the records, I find that the appellant availed Cenvat credit of Rs. 18,035.00 on rejected raw -materials, Rule 3 of the Cenvat Credit Rules, 2004 provides that the manufacture is eligible to avail Cenvat credit on duty paid inputs used in or in relation to the manufacture of final products. In the present case, there is no dispute that the inputs were rejected material and cannot be used in or in relation to the manufacture of the final products. The appellant reversed credit during the investigation. So, there is no merit in the submission of the learned Advocate on this issue. The case law relied upon by the Learned Advocate is not applicable in the present case. In the case of Bharat Heavy Electricity Ltd. (supra), the goods were written off in the books of accounts and therefore, the department presumed that the inputs may not be used in the manufacture of the final product. But, in the present case, it is admittedly the input is rejected materials and it cannot be used in the manufacture products.
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