2016 (2) TMI 201

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....rocessing Plant during July 2004. The appellant later changed their manufacturing process to the "Membrane Cell Process" and had stopped production of caustic soda through the Mercury Cell Processing plant. The appellant had stock of 42262.5 kg of mercury in the plant and sold the said mercury on 22.9.2004 without payment of duty and without raising any invoice. 2. The Revenue issued the appellant show-cause notice asking for the duty at the rate of 16% totalling to Rs. 17,78,406/-. 2.1 The Revenue vide order of Joint Commissioner confirmed the duty of Rs. 17,78,406/- along with interest and also imposed equivalent penalty under Section 11AC of the Central Excise Act. 2.2 The order of the Joint Commissioner was confirmed by Order-i....

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.... There was no provision in the CENVAT Credit Rules warranting a reversal of credit of duty on the Mercury in circumstances where the input was not cleared as such to rather clearance was of used inputs. 3.1 The appellant further pleads that there was no justification for imposition of penalty equal to the duty liability under Section 11AC of Central Excise Act. It is settled law that under Section 11AC penalty is only mandatory and the quantum being discretionary. 3.2 In support, the appellant has cited the Hon'ble apex court decision in the case of Indian Organic Chemicals Ltd. vs. Collector of Customs & Excise: 1996 (88) E.L.T. 644 (S.C.). 4. The learned AR representing the Revenue argued that the input mercury was used in the ma....

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....s disposal by way of sale, when they had shifted the manufacturing process from Mercury Cell Process to Membrane Cell Process. The appellant also stated during the hearing before the Tribunal that they had not taken any CENVAT credit in respect of this Mercury. However, facts on record do not throw any light on the fact if the appellant had taken any CENVAT or not on the said item of Mercury. However, regarding this sale/clearance of Mercury (or contaminated mercury), the appellant is entitled to the benefit of Rule 3(4) of CENVAT Credit Rules, 2001 for payment of duty of Central Excise on the said cleared/sold Mercury, if the appellant has got the documentary evidence of having taken CENVAT credit for the purchase of the said Mercury. 5....