2006 (8) TMI 82 - AT - Central Excise

Court sets aside unjustified demand under Cenvat Credit Rules, allowing appeal. No liability for interest or penalty.

TATA IRON & STEEL CO. LTD Versus COMMISSIONER OF C. EX., MUMBAI-V

The appeal challenged a demand of Rs. 3,02,53,280 under Rule 6(3)(b) of the Cenvat Credit Rules, 2002, along with interest and penalty. The Court found ... Cenvat/Modvat – Alleged that appellant is not a manufacturer of oexcisable good and accordingly not entitle for benefits of exemption – Adjucating authority after considering all the fact rejected the penalty and interest imposed on it Issues:1. Alleged demand of Rs. 3,02,53,280 under Rule 6(3)(b) of the Cenvat Credit Rules, 2002 along with interest and penalty.2. Manufacturing activities at Borivali factory and compliance with procedural requirements.3. Interpretation of Rule 6(2) and Rule 6(3)(b) of the Cenvat Credit Rules.4. Application of Rule 16 of the Central Excise Rules.5. Bar on limitation for demands and applicability of interest and penalty.Analysis:Issue 1:The appeal challenged an Order-in-Original confirming a demand of Rs. 3,02,53,280 under Rule 6(3)(b) of the Cenvat Credit Rules, 2002, along with interest and penalty. The period involved was from May 29, 2003, to July 7, 2004.Issue 2:The appellant operated a factory in Maharashtra engaged in manufacturing activities, including wires falling under Chapter 72 and 73 of the Central Excise Tariff Act, 1985. They availed Modvat/Cenvat Credit for duty paid on input materials like Wire Rods and complied with procedural requirements.Issue 3:The interpretation of Rule 6(2) and Rule 6(3)(b) of the Cenvat Credit Rules was crucial. The appellant argued that the wires drawn during the relevant period did not amount to manufacture of excisable goods, and therefore, should not be considered exempted from Excise Duty or cleared at nil rate of duty.Issue 4:The application of Rule 16 of the Central Excise Rules was examined. The appellant contended that they were entitled to take Cenvat Credit of the duty paid on goods brought into the factory for any reason, and the duty paid on finished products satisfied the requirements of Rule 16(2).Issue 5:The demand for the period in question was deemed unjustified and time-barred. The extended period under Section 11A(1) could not be invoked. Consequently, no findings regarding interest or penalty liability were warranted. The order was set aside, and the appeal was allowed on 3-8-2006.