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of <h1>Tribunal Upholds Decision on Cenvat Credit Recovery & Penalty Imposition</h1> <h3>COMMISSIONER OF CENTRAL EXCISE, VAPI Versus GAYATRI INDUSTRIES</h3> COMMISSIONER OF CENTRAL EXCISE, VAPI Versus GAYATRI INDUSTRIES - 2009 (245) E.L.T. 272 (Tri. - Ahmd.) Issues:1. Recovery of Cenvat Credit and penalty imposition.2. Contravention of Cenvat Credit Rules by the respondents.3. Dispute regarding the replacement of raw materials by the job worker.4. Applicability of the decision of the Hon'ble Bombay High Court in a similar case.Analysis:1. Recovery of Cenvat Credit and Penalty Imposition:The Original Adjudicating Authority had ordered the recovery of Cenvat Credit along with interest and imposed a penalty on the appellants. However, the Commissioner (Appeals) set aside this order, leading the Revenue to file an appeal against the Commissioner's decision.2. Contravention of Cenvat Credit Rules:The Department argued that the respondents failed to ensure that the job worker used the imported goods, leading to a contravention of the Cenvat Credit Rules. On the other hand, the advocate for the respondents contended that the respondents were also victims of the job worker's actions, who sold the imported goods and obtained local inputs from another source.3. Dispute Regarding Replacement of Raw Materials:The advocate for the respondents highlighted that the job worker replaced the raw materials, and the respondents were unaware of this substitution until the Department seized the goods. It was emphasized that the duty paid by the third-party supplier exceeded the credit taken by the respondents, indicating no revenue loss to the Department.4. Applicability of the Bombay High Court Decision:The advocate for the respondents relied on the decision of the Hon'ble Bombay High Court in a similar case to support the argument that the respondents should not be penalized since the duty was paid on the inputs used by the job worker, and the goods were received after the completion of the job work.In the final judgment, the Tribunal agreed with the advocate for the respondents, acknowledging that the respondents were victims of the job worker's actions, and the actual credit taken was less than the duty paid. The Tribunal upheld the Commissioner (Appeals) order, rejecting the Revenue's appeal. It was concluded that the appellants' credit was lower than the duty paid, and the seizure of the imported goods had been initiated, indicating no revenue loss.
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