Appeal granted for Cenvat credit but penalty upheld for rule breach and invoice book misuse.

The Tribunal partially allowed the appeal, granting the appellant entitlement to the Cenvat credit but confirming the penalty imposed under Rule 27 for breaching Cenvat credit rules and using two sets of invoice books simultaneously.

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Issues:
1. Admissibility of Cenvat credit on inputs exceeding SSI limit.
2. Violation of Cenvat credit rules and notification.
3. Usage of two sets of invoice books simultaneously.
4. Imposition of penalty under Rule 27 of Central Excise Rules.

Analysis:
1. The appellant, a manufacturer of MS Rounds, MS Strips, and M.S. Square, exceeded the SSI limit and informed the revenue about paying tax at the normal rate from a certain date. However, the revenue found discrepancies in the availing of Cenvat credit on inputs prior to the specified date, leading to a show cause notice for demanding the credit amounting to Rs. 1,30,864/- and imposing a penalty under Rule 27 of the Rules.

2. The appellant contested the show cause notice, arguing that they had only taken credit in anticipation and had not utilized it for goods under exemption. They also explained the usage of two sets of invoice books, stating proper intimation was given to the revenue. However, the order-in-original upheld the demand for Cenvat credit and imposed a penalty for violating Cenvat credit rules and using two sets of invoice books.

3. On appeal, the Commissioner held that the provisions were mandatory, emphasizing that manufacturers cannot avail credit until the exemption limit is exceeded. The appellant's contention of legal fiction under Cenvat credit rules and notification was rejected, confirming the impugned order and rejecting the appeal.

4. The appellant appealed to the Tribunal, arguing that the breach was minor, and the substantial benefit of Cenvat credit should not be denied. The Tribunal considered that the appellant had not utilized the credit before the specified date, ruling in favor of the appellant for availing the Cenvat credit but confirming the penalty under Rule 27.

In conclusion, the Tribunal allowed the appeal partially, holding the appellant entitled to the Cenvat credit but confirming the penalty for the breach.

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