2009 (1) TMI 656 - AT - Central Excise

Appellate Tribunal rules in favor of sugar manufacturer on Cenvat credit denial

The Appellate Tribunal CESTAT, New Delhi, allowed two appeals concerning the denial of Cenvat credit on duty-paid molasses purchased externally by a sugar ... Cenvat/Modvat - Molasses lost during storage, denial of credit The Appellate Tribunal CESTAT, New Delhi, under the leadership of Shri Rakesh Kumar, J., heard two appeals against the Order-in-Appeal No. 174-C.E./Appl/MRT-II/06 and No. 222-C.E./ Appl/MRT-II/06. The issue in both appeals was the same, but the disputed periods varied. The appeals were disposed of by a common order. The Appellants, a sugar manufacturer with a distillery unit, used molasses from both internal and external sources. Cenvat credit was claimed on the duty paid molasses purchased externally. The Assistant Commissioner initially dropped the demand for Cenvat credit, citing a tribunal judgment. However, the Commissioner reviewed and filed appeals, arguing that the Assistant Commissioner did not have the authority to condone losses and that only the Commissioner could remit duty. The Commissioner (Appeals) accepted this argument and remanded the case for remission of duty by the competent authority. The Appellant's counsel argued that the case was about denying Cenvat credit for lost molasses, not remission of duty. The Tribunal found that the issue was indeed about denying Cenvat credit, not remission of duty, and that the Commissioner's review appeals and the Commissioner (Appeals)'s orders lacked merit. The Tribunal cited a previous case upheld by the Supreme Court and set aside the impugned orders, allowing the appeals. The Tribunal concluded that the case was a Cenvat credit dispute, not a remission of duty matter. The impugned orders were deemed unsustainable and set aside, and the appeals were allowed. The order was dictated in open court.