2009 (1) TMI 268 - AT - Central Excise

Tribunal allows appeal, grants Cenvat credit for welding electrodes, reduces penalty. Legal precedents, principles emphasized.

UP. STATE SUGAR CORPORATION LTD. Versus COMMR. OF C. EX., MEERUT-I

The Tribunal allowed the appeal, setting aside the disallowance of Cenvat credit for welding electrodes and reducing the penalty imposed on the Appellant ... Cenvat credit – documents for availing cenvat credit – impact of challenge of duty at suppliers end – credit on welding electrodes used for repair and maintenance of plant and machinery – held that - the assessment cannot be revised at the end receiver of the goods - that quantum of duty already determined by the Jurisdictional Officer of the supplier unit cannot be contested by the officer incharge of recipient unit - Cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery is admissible to the Appellant - . When the Department has not challenged the assessment of duty at the supplier’s end, it would not be correct to deny Cenvat credit on the basis of the invoice issued by the supplier on the ground that the duty paid under that invoice was not payable Issues:1. Eligibility of welding electrodes for Cenvat credit.2. Denial of Cenvat credit based on invoices issued by a registered dealer.3. Imposition of penalty on the Appellant.Eligibility of Welding Electrodes for Cenvat Credit:The appellant argued that welding electrodes used for repair and maintenance of machinery are eligible for Cenvat credit based on the judgment of the Hon'ble Rajasthan High Court in Hindustan Zinc Ltd. v. Union of India. They contended that the dismissal of the SLP by the Hon'ble Supreme Court in a related case does not establish a legal precedent. The Tribunal agreed, citing the principle that a summary dismissal of an SLP does not affirm the judgment on merit. Therefore, the Tribunal held that the Cenvat credit for welding electrodes is admissible to the Appellant.Denial of Cenvat Credit Based on Invoices:Regarding the denial of Cenvat credit of Rs. 2,655/- based on invoices issued by a registered dealer, the Department argued that the amount was in excess of the duty payable on the goods cleared. However, the Tribunal referred to the judgment in the case of CCE v. MDS Switchgear Ltd. by the Hon'ble Supreme Court, stating that the duty determined by the supplier unit cannot be contested by the recipient unit. As the Department did not challenge the assessment of duty at the supplier's end, the Tribunal held that the Cenvat credit of Rs. 2,655/- is admissible to the Appellant.Imposition of Penalty:The Department contended that a penalty should be imposed on the Appellant for clearing inputs without payment of duty. The Tribunal acknowledged that a penalty was warranted due to the upheld demand of Rs. 41,717/- for removal of Cenvated inputs without duty payment. While the penalty was reduced from the initial amount, the Tribunal decided that a penalty of Rs. 10,000/- would be appropriate given the circumstances. Consequently, the Tribunal set aside the disallowance of Cenvat credit and reduced the penalty imposed on the Appellant.In conclusion, the Tribunal allowed the appeal, setting aside the disallowance of Cenvat credit and reducing the penalty to Rs. 10,000/-. The judgment emphasized the importance of legal precedents and the principles governing the admissibility of Cenvat credit and penalties in such cases.