2017 (12) TMI 280 - AT - Central Excise

Tribunal rules for appellants in duty and cenvat credit demands case

The tribunal ruled in favor of the appellants in a case involving duty demands on finished goods cleared as salvage and cenvat credit demands on inputs ... Remission of duty - goods destroyed in fire - clandestine removal - Held that: - The impugned order does not bring out any independent corroborative evidence to shows that the goods found at M/s Noor Printing Press were cleared clandestinely by the Appellant or were same goods on which remission has been sought by the Appellant - the goods in dispute i.e alleged to have been found in drums at M/s Noor Printing press were only 2773.5 Kgs whereas the remission claim filed by the Appellant is in respect of 61496.09 Kgs of finished goods. There is no dispute about the remaining quantity. The evidence relied upon by the adjudicating authority nowhere leads to the conclusion that the goods in respect of which the remission has been claimed were removed clandestinely - remission of duty allowed. CENVAT credit - inputs used in finished goods destroyed in fire - Held that: - issue of reversal of cenvat credit of inputs used in finished goods stands settled by Hon’ble Madras High Court judgment in case of COMMISSIONER OF C. EX., CHENNAI-III Vs. JOY FOAM PVT. LTD. [2015 (7) TMI 386 - MADRAS HIGH COURT] as per which no reversal of credit is required - demand set aside. Appeal allowed - decided in favor of appellant. Issues involved:1. Duty demand on finished goods cleared as salvage.2. Cenvat credit demand on inputs used in finished goods destroyed in fire.Detailed Analysis:1. Duty demand on finished goods cleared as salvage:The case involved the appellants engaged in manufacturing printing inks facing duty demands and penalties due to a fire incident damaging their goods. The insurance claim was made, but the authorities alleged that finished goods were clandestinely removed as scrap without paying duty. The adjudicating authority confirmed the demands, stating that the goods were cleared without duty payment, leading to cenvat credit recovery. However, the counsel for the appellant argued that the goods were cleared under supervision, and the evidence linking the salvaged goods to the damaged goods was insufficient. The appellate tribunal found no substantial evidence to support the duty demand, as the quantity of goods found did not match the remission claim. Consequently, the tribunal ruled in favor of the appellant, allowing the remission of duty on finished goods and setting aside the demand and penalties.2. Cenvat credit demand on inputs used in finished goods destroyed in fire:Regarding the demand for cenvat credit on inputs used in the damaged finished goods, the appellant argued they were eligible for the credit, citing relevant legal precedents. The tribunal concurred, stating that the issue of credit reversal was settled by previous judgments, indicating no requirement for credit reversal. Therefore, the tribunal found the demand for credit reversal and penalty unsustainable, ultimately allowing the appeals and providing consequential reliefs to the appellants. The judgment was pronounced on 19/11/2017 by the tribunal.