2013 (9) TMI 167 - AT - Central Excise

Tribunal upholds Commissioner's orders, except one, penalties set aside, demands sustained.

GOLDEN TOBACCO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V

The Tribunal upheld most of the Commissioner (Appeals)'s orders and dismissed the appeals, except for one where the order was set aside due to ... Recovery of CENVAT Credit - removal as such - rollers/cylinders were used for printing and when they became worn out, the same were again cleared to their vendors for new engraving/dechroming - Held that:- The demands confirmed against the appellants were sustainable - The expression “as such” used in the Rules had to be interpreted as commonly understood which was in the “original form” and “without any addition, alteration and modification” – The Commissioner (Appeals)’ order was concerned was not sustainable - after the issue of the show cause notice covered in the appeals, which goes to show that there had been dispute on the interpretation of the expression “as such” - MODERNOVA PLASTYLES PVT. LTD. Versus COMMISSIONER OF C. EX., RAIGAD [2008 (10) TMI 51 - CESTAT, MUMBAI] - expression “as such” not having any connection with capital goods being new, unused or used and covered both capital goods cleared without being put to use and after use. - Decided in favor of assessee. Issues involved:Appeal against Order-in-Appeal upholding lower adjudicating authority's order regarding CENVAT credit on goods removed as such without payment of Central Excise duty, interpretation of Rule 3(4)(c) and Rule 4(5)(a) of Cenvat Credit Rules, 2004, applicability of Larger Bench's decision in Modernova Plastyles case, imposition of penalty, suppression of facts, limitation period for appeals, and sustainability of demands confirmed against the appellants.Analysis:1. CENVAT Credit on Goods Removed as Such:The appellants challenged the demand for duty on goods removed as such, arguing that they were put to use and not removed as such. They relied on the Larger Bench's decision in Modernova Plastyles case and Tribunal decisions in Cummins India Ltd. case. However, the Tribunal found that the expression 'as such' in the rules includes goods cleared without being put to use and after use. The demands confirmed against the appellants were deemed sustainable based on this interpretation.2. Interpretation of Cenvat Credit Rules:The Tribunal clarified the interpretation of Rule 3(4)(c) and Rule 4(5)(a) of Cenvat Credit Rules, 2004, emphasizing that the expression 'as such' refers to goods in their original form without any alteration. The Tribunal distinguished the Cummins India Ltd. case cited by the appellants, stating that the Larger Bench's decision in Modernova Plastyles case prevails in such matters.3. Penalty Imposition and Suppression of Facts:The appellants argued against penalty imposition, citing the absence of suppression and the existence of a legal dispute on the interpretation of the rules. The Tribunal agreed, referencing the Hon'ble Supreme Court's decision in Mentha & Allied Products case, which highlighted the existence of differing views on the issue at various stages, making penalty imposition inappropriate.4. Limitation Period and Sustainability of Demands:Regarding the limitation period for appeals, the Tribunal noted that the show cause notice for a specific period was issued after a similar notice for a subsequent period, indicating departmental knowledge of the issue. The Tribunal found that suppression of facts could not be alleged in this context. The demands confirmed against the appellants were upheld, except for Appeal No. E/1111/09, where the Commissioner (Appeals)'s order was set aside due to sustainability concerns.5. Final Decision:Based on the above analysis and following the Modernova Plastyles case, the Tribunal upheld most of the Commissioner (Appeals)'s orders and dismissed the appeals, except for Appeal No. E/1111/09, which was allowed. The penalty imposed on the appellants was set aside due to the nature of the case involving interpretation of rules. The appeals were disposed of accordingly.This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive overview of the Tribunal's decision and the arguments presented by the parties involved.