2017 (3) TMI 1075 - AT - Central Excise

Tribunal overturns central excise duty demands on alleged shortages, penalties deleted.

Sheela Foam Pvt. Ltd., Sh. Ajay Tiwari, Manager Excise. And She P. Patel, Director Versus C.C.E. -Noida

Sheela Foam Pvt. Ltd., Sh. Ajay Tiwari, Manager Excise. And She P. Patel, Director Versus C.C.E. -Noida - 2017 (358) E.L.T. 1085 (Tri. - All.) Issues:1. Central Excise Duty on alleged stock shortage2. Differential duty on irregular blocks of PU Foam3. Central Excise Duty on waste inputs cleared without payment4. Central Excise Duty on 'burnt machinery' removed as waste5. Appropriation of already deposited amounts against proposed demand6. Central Excise Duty on inputs consumed in job work material7. Disallowance and recovery of Cenvat Credit8. Chargeability of interest on amounts and appropriation of already deposited interest9. Imposition of penalties under various rules10. Liability of specific individuals to penaltiesAnalysis:1. The first issue concerns the shortage of inputs, where the appellant had paid the duty calculated by the Revenue without contesting the duty on the alleged shortage but challenging the penalty imposed. The Tribunal found no violation and set aside the demand.2. Regarding the differential duty on PU Foam blocks cleared to related parties, the appellant's calculation based on transaction value was upheld, and the demand for both extended and normal periods was set aside.3. The duty on waste inputs like papers, polythene, and HDPE bags, which were not manufactured goods but waste disposed of after use, was held not payable, and the demand was set aside.4. The duty on burnt machinery removed as scrap was not contested, and the duty was paid, leading to the argument for penalty deletion, which was accepted by the Tribunal.5. The demand for duty on inputs consumed in job work material was set aside as the products were taxable, not exempted, and the disallowance of input credit was not justified.6. The Cenvat credit amount was not required to be recovered as the duty paid by suppliers was not altered despite valuation changes, leading to the penalty imposed being deleted due to interpretational issues and change of opinion.7. The Tribunal found no contumacious conduct or suppression and deleted the penalties imposed on all appellants, including specific individuals, based on the interpretational nature of the issues and the change of opinion. Appeal No. E/1978/2008 was allowed in part, and Appeal Nos. E/1979 & 1980/2008 were fully allowed.