2003 (5) TMI 447

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....genously or imported. They are availing the credit of duty paid on various chemicals used in the manufacture of their final products. 2. The Commissioner of Central Excise disallowed Cenvat credit amounting to Rs. 65,69,795/- to the appellants in respect of Caustic Soda Flakes, Soda Ash and Titanium Dioxide for the period August, 2000 to March, 2001. The denial of the credit was on the ground that 627 MTs of Caustic Soda/Flakes, 1282.225 MTs of Soda Ash and 311.675 MTs of Titanium Dioxide had not been used in the process of manufacture of final products. The Commissioner also demanded interest on the above amount and imposed penalty equal to duty, on the party. He also imposed a personal penalty of Rs. 10 lakhs on Shri Parveen Jain,....

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....nd the Titanium Dioxide purchased during the period August, 2000 to March, 2001 was used in the manufacture of coated paper in this plant. This plant was not in existence during the previous period 1999-2000 and hence the lower consumption for that period. It was further submitted that, during the subsequent period 2001-2002. The appellants purchased and used a total quantity of 388.6 MTs of Titanium Dioxide. Therefore, the Commissioner's finding that 311.675 MTs of Titanium Dioxide (involving Cenvat credit of Rs. 37,96,944/-) were not utilized in the manufacture of final product by reason of the said quantity being in excess of the quantity used in the previous year was not justifiable. Referring to denial of credit on Caustic Soda and Sod....

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....sp;We have examined the submissions. In respect of Titanium Dioxide, the Commissioner has recorded a finding that a quantity of 311.675 MTs, on which Cenvat credit of Rs. 37,96,944/- was taken by the appellants, had not been utilized in the process of manufacture of paper and paper board. The basis for this finding is that this much quantity of the chemical had not been used in the previous year 1999-2000. The appellants had cogently submitted before the Commissioner that, by the installation of coating plant in July, 2000, their production capacity in respect of coated paper had increased and consequently extra quantity of Titanium Dioxide had been used for the manufacture of coated paper during August, 2000 to March, 2001. They also sough....

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....ste paper. Had the Commissioner examined the appellant's explanation, it would not have been possible for him with a judicial mind to record a finding as above. The reliance placed by the appellants in the case of Indapur SSK Ltd. (supra) appears to be apt to this context. 7. There is no dispute of the duty-paid nature of the subject inputs, nor is there any case for the Department that those inputs were not received in the appellants' factory. The only case of the Department is that the inputs were not utilized in the manufacture of final products. However, there is no finding in the impugned order as to in what manner other than such utilization the inputs in question were used or disposed of by the party. The learned DR submitted....