TaxTMI 
TaxTMI 
2010 (11) TMI 281
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....following two questions : (1) In view of the facts and circumstances said above, whether the Hon'ble CESTAT is justified in imposing penalty under Rule 27 of the Central Excise Rules, 1944, when it is established that the case is of wrong availment of Cenvat credit on input which were neither brought into the factory of the assessee or utilized in or in relation to the manufacture of finished products? (2) In view of the facts and circumstances said above, whether the Hon'ble CESTAT is justified in not appreciating the Order-In-Original No. MP/30/ Offence/07-08 dated 11-3-2008, passed by the Assistant Commissioner, Central Excise, Division-III, Ahmedabad-II, confirming the duty of Rs. 2,79,969....
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....e appeal. The Commissioner (Appeals) found that the assessee had purchased M.S. Drums from manufacturers of drums and had availed CENVAT credit on the duty paid on such drums. The assessee had not undertaken any manufacturing process on the said drums but sold the same to the buyers raising central excise invoices and discharging central excise duty thereon. According to the Commissioner (Appeals), if the assessee had paid excise duty, then it was entitled to avail CENVAT credit even if no manufacturing was undertaken on the purchased goods. It was noted that in the present case, the assessee had paid the central excise duty on the purchased drums and after selling the same it had also discharged the duty thereon and cleared the same under ....
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....ent of Central Excise duty without undertaking any process thereon and without bringing the same in its factory premises. M.S. Drums being finished goods cannot be treated as input and as such, the assessee was not entitled to avail of CENVAT credit in respect thereof. The assessee had indulged in the activity of trading of drums only and not manufacturing and as such, had wrongly taken the CENVAT credit on the M.S. Drums so purchased. It was submitted that in the light of Rule 3(1) of the CENVAT Credit Rules, 2004, the assessee was not entitled to avail of CENVAT credit in relation to any activity which did not amount to manufacturing activity and as such, the Tribunal was not justified in confirming the order of Commissioner (Appeals) to ....
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....s noted by both the Commissioner (Appeals) as well as the Tribunal, though the assessee had availed of CENVAT credit on the M.S. drums purchased by it, it had sold the same to buyers raising central excise invoices and had discharged central excise duty thereon. Thus, on the one hand, while the assessee was not entitled to avail of CENVAT credit on the M.S. Drums purchased by it, correspondingly there was also no obligation on it to pay central excise duty on the sale thereof as it had not carried out any manufacturing activity thereon. Thus, the entire exercise is revenue neutral inasmuch as though CENVAT credit had been wrongly availed, central excise duty had been paid on the goods in respect of which CENVAT credit had been availed. 7....