2018 (9) TMI 1427 - AT - Central Excise

Tribunal rules in favor of sugar company, reversing credit and dismissing duty demands

The Tribunal ruled in favor of the appellant, a sugar manufacturing company, in a case involving the alleged improper availment of credit on Iron and ... CENVAT credit - Bagasse and Press mud, cleared as exempt goods - Rule 6(3) of Cenvat Credit Rules - Held that:- The issue is no more res-integra and stands covered by the Supreme Court’s judgment in the case of Union of India V/s DSCL Sugar LTD. [2015 (10) TMI 566 - SUPREME COURT], where it was held that It could not be pointed out as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter notice. In the absence thereof this deeming provision cannot be attracted - demand set aside. CENVAT Credit - sugar found short - demand is based upon the statement of only one Shri Muthu Kumar which is contrary to the statement of Shri Sandeep Singh - Held that:- There is no other corroborative evidence to establish the said allegations. As the appellant is not contesting the said confirmations having deposited the same along with depositing of interest, the same is upheld - penalties are set aside. Appeal disposed off. Issues:1. Availment of credit on Iron and Steel items2. Shortage of sugar and scrap involving duty3. Imposition of penalties on the grounds of credit availment and shortages4. Demand of duty on sale of Bagasse and Press mudAnalysis:1. The appellant, engaged in sugar manufacturing, faced allegations regarding the availment of credit on Iron and Steel items without actual use. Statements of employees conflicted, with one admitting to credit availment based on invoices and another denying misuse. The appellant reversed the credit and duty related to shortages voluntarily. The Advocate argued lack of evidence supporting improper credit availment or clandestine clearance of sugar and scrap. The Tribunal noted the sole reliance on one employee's statement by the Revenue, upheld confirmations due to deposits made by the appellant, but set aside penalties.2. A significant duty amount was related to the sale of Bagasse and Press mud, treated as exempted goods by the appellant. The demand was made under Rule 6(3) of Cenvat Credit Rules. Citing a Supreme Court judgment in a similar case, the Tribunal set aside the demand and penalties on this ground, aligning with the precedent. The Tribunal disposed of the appeal accordingly, following the legal principles and evidence presented during the proceedings.