2017 (3) TMI 363

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....e of Benzene, MDC & DIPE under the category of inputs and availed CENVAT credit of the duty paid on these items. Later in 2009 as the solvents became unfit to be used for manufacture of finished goods they cleared them as spent solvent by paying duty on the transaction value. A Show Cause Notice was issued alleging that appellants have cleared solvents/inputs as such, in the guise of spent solvents and did not reverse the credit as required under Rule 3(5) of CENVAT Credit Rules, 2004. The Show Cause Notice proposed to demand CENVAT amounting to Rs. 1,73,266/- along with interest and also to impose penalty. After due process of law, the original authority confirmed the demand along with interest and appropriated the amounts which was alread....

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....out by the Counsel that in the Show Cause Notice the proposal for imposing penalty was under Rule 14, whereas, the adjudicating authority has proceeded to impose penalty under Rule 15 (2). In support of his argument the Ld. Counsel relied upon the judgment in the case of Madras Cements Ltd, Vs. CCE, Trichy [2010 (259) ELT 137 (Tri. - Chennai)] CCE, Chennai Vs. Kyungshin industrial Motherson Ltd, [2009 (239) ELT 121 (Tri. - Chennai)]. The judgment laid in CCE, Bangalore-II Vs. Pushpadeep Enterprises [2012 (279) ELT 503 (Kar)] was relied to canvass the proposition that when duty along with interest is paid, no show cause notice shall be issued and that assessee cannot be burdened to pay penalty. 4. Against this, the Ld. AR, Shri. P S. Reddy,....

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....how that the solvents cleared as spent solvents were fit for use by appellant in the manufacture of final products. It is seen to be cleared on as-is-where-is basis to the customer as 'spent solvents'. There is no enquiry conducted at the end of the buyer as to whether he used them as solvents or spent solvents. The only inference that can be drawn is that the solvents were cleared as they became unfit for use. 6. In the case of Madras Cements Ltd., (supra) the Tribunal had occasion to consider the issue of damaged bags used for packing cement. The Show Cause Notice was issued in the said case alleging that assessee ought to have reversed the credit in respect of bags which were torn at the time of packing cement and that the packi....