2003 (10) TMI 326 - AT - Central Excise

Tribunal rules in favor of manufacturers in excise duty case, emphasizing distinction between violations and revenue loss

The tribunal ruled in favor of the appellants, manufacturers of excisable goods, in a case involving the availing of Cenvat credit on self-invoices ... Cenvat/Modvat - Duty paying documents - Invoice Issues:Cenvat credit availed on invoices showing self as consignee, imposition of penalty under Rule 173Q of the Central Excise Rules.Analysis:The case involved the appellants, manufacturers of excisable goods, specifically Sodium Bichromate, which resulted in the production of Yellow Sodium Sulphate. This Yellow Sodium Sulphate was either sold or sent to job workers for conversion into White Sodium Sulphate. The appellants debited the duty on the quantity of Yellow Sodium Sulphate sent for job work and then took credit of the duty paid upon return from the job worker. The Revenue objected to the Cenvat credit availed on invoices where the appellants were shown as the consignee. Two show cause notices were issued proposing the recovery of credit amounts and the imposition of penalties. The Assistant Commissioner confirmed the demand and imposed a penalty of Rs. 10 lakhs under Rule 173Q of the Central Excise Rules. The Commissioner (Appeals) upheld this decision, leading to the appeal before the tribunal.Upon hearing both sides, the tribunal noted that the appellants had debited the duty and then taken credit for excisable goods sent to job workers and returned after conversion, ensuring no loss of revenue. The tribunal considered the availing of Cenvat credit on self-invoices as a technical violation, where the substantive benefit of credit should not be denied. Consequently, the tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellants.This judgment highlights the importance of distinguishing between technical violations and substantive losses to revenue in excise duty matters. The tribunal emphasized that in cases where there is no actual loss to the revenue and the violation is merely technical, the benefit of credit should not be denied. The decision serves as a reminder to consider the practical implications and actual impact on revenue while interpreting excise duty provisions and imposing penalties under the Central Excise Rules.