2007 (12) TMI 353 - AT - Central Excise

Summary

Issues:
1. Demand confirmation for waste and scrap of capital goods
2. Denial of credit for DG set not used in production
3. Applicability of Cenvat Credit Rules for duty payment on scrap

Analysis:

Issue 1: The appellant appealed against the order confirming demand for waste and scrap of capital goods. The appellant argued that during the relevant period, there was no provision under the Cenvat Credit Rules for demanding duty on scrap of used capital goods cleared from the factory. The appellant relied on a previous judgment to support their case. The Tribunal found that during the period in question, there was no rule demanding duty on waste and scrap of capital goods. Therefore, the demand for duty on waste and scrap of capital goods was deemed unsustainable and set aside.

Issue 2: The denial of credit for a DG set not used in the production of goods was also contested by the appellant. The appellant claimed that the allegation of the DG set being used for providing electricity in the residential area was based on verbal enquiry without any evidence. However, the Tribunal noted that there was an allegation in the show cause notice regarding the use of the DG set for supplying electricity in the residential area. Since the appellant failed to provide evidence that the DG set was used for production purposes in the factory, the denial of credit was upheld.

Issue 3: The appellant's contention regarding the applicability of the Cenvat Credit Rules for duty payment on waste and scrap of capital goods was crucial in this case. The Tribunal found that the introduction of Rule 3(5A) of the Cenvat Credit Rules in 2001 mandated duty payment on waste and scrap of capital goods. However, since no such rule was in place during the period under consideration, the demand for duty on waste and scrap of capital goods was deemed unsustainable and set aside.

In conclusion, the Tribunal set aside the demand for duty on waste and scrap of capital goods due to the absence of a relevant rule during the period in question. The denial of credit for the DG set not used in production was upheld as the appellant failed to provide evidence supporting their claim. The penalty imposed on the appellant for wrongly availing credit in respect of the DG set was reduced to Rs. 15,000, and the appeal was disposed of accordingly.