2019 (5) TMI 1456 - AT - Central Excise

Tribunal rules trolleys not captively consumed under duty exemption, grants opportunity for Cenvat credit claim

The appeal was allowed in the case concerning captive consumption of trolleys for duty exemption under Notification No.67/1995-CE. The Tribunal ruled that ... Captive consumption - N/N. 67/1995-CE - Time limitation - HELD THAT:- The appellants have manufactured trolleys which were being used by them for packing of various motor vehicle parts for further transportation. As such, the trolleys crossed the factory gate and were cleared by the appellant. In such a scenario, it cannot be said that the same were captively consumed and were exempted under Notification No.67/1995-CE. Time Limitation - HELD THAT:- In the absence of any evidence to the contrary, no malafide can be attributed to them. As such, we hold that the extended period of limitation would not be available to the revenue - we set aside that part of the demand which is hit by the bar of limitation, being beyond the normal period and direct the Original Adjudicating Authority to re-quantify the demand falling within the limitation period only in respect of trolleys manufactured by them. The appellant’s plea is that they would be entitled to Cenvat credit of duty paid on the inputs used in the manufacture of the said trolleys. The appellant is at liberty to substantiate the plea by production of evidences before the Original Adjudicating Authority to whom the matter is being remanded for re-quantification of demand falling within the limitation period. Penalty - HELD THAT:- It is already held that there is no malafide on the assessee’s part, there are no reasons to impose penalty upon him - penalty set aside. Appeal allowed by way of remand. Issues:- Captive consumption of trolleys for availing duty exemption under Notification No.67/1995-CE.- Time bar for initiating proceedings based on audit objections.- Availability of Cenvat credit on duty paid on inputs used in manufacturing trolleys.- Imposition of penalties in case of no malafide intent.Captive Consumption Issue:The judgment revolves around the appellant's claim of captive consumption of trolleys for availing duty exemption under Notification No.67/1995-CE. The appellant argued that as the trolleys were being reused after being returned by customers, they should be considered captively consumed. However, the Tribunal found that since the trolleys crossed the factory gate and were cleared by the appellant, they did not qualify as captively consumed goods under the notification. The appellant's contention that they also procured trolleys from others to avoid duty liability was not substantiated due to lack of records, although they later claimed to have acquired supporting evidence.Time Bar Issue:Regarding the time bar for initiating proceedings, the appellant argued that they were under a genuine belief that trolleys used for packing spare parts did not attract excise duty. They highlighted that previous audits did not raise any objections, and the present proceedings were based on an audit objection from 2015. The Tribunal held that if the appellant's activities were reflected in their statutory records and there was no evidence of malafide intent, the extended period of limitation would not apply. Consequently, the demand beyond the normal period was set aside, and the Original Adjudicating Authority was directed to re-quantify the demand within the limitation period.Cenvat Credit Issue:The appellant claimed entitlement to Cenvat credit on duty paid for inputs used in manufacturing trolleys. The Tribunal allowed the appellant to substantiate this claim with evidence before the Original Adjudicating Authority during the re-quantification process within the limitation period.Penalties Issue:Given the absence of malafide intent on the appellant's part, the Tribunal decided not to impose penalties. The appellant's plea was accepted, and the penalty was set aside accordingly.In conclusion, the appeal was allowed based on the findings related to captive consumption, time bar limitations, Cenvat credit entitlement, and the absence of malafide intent for imposing penalties. The judgment provided detailed analysis and directions for the re-quantification of the demand within the limitation period, emphasizing the importance of maintaining statutory records and substantiating claims with evidence.