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2014 (5) TMI 795 - AT - Central ExciseArea Based Notification No. 56/2002-CE dated 14.11.2002 - Shortage of stock - Clandestine activity - Held that:- Both the units are located in area of Jammu & Kashmir and were enjoying the exemption Notification No. 56/2002. As per the said notification an assessee is entitled to avail the Cenvat credit of duty paid on the inputs. The said Cenvat credit is required to be first exhausted for payment of duty on the final product and thereafter the balance duty on the final product is to be paid out of the PLA. The duty paid out of PLA is subsequently refunded to the manufacturer. The said mechanism of payment of duty first by exhausting the credit amount and then by way of refund of the PLA duty amounts to exemption to an assessee located in the area of Jammu & Kashmir. The entire situation is Revenue neutral and no assessee would get benefitted by indulging into clandestine activity. Appellants have given suitable explanations for the removal of the aluminium coils to their sister unit, which the sister unit has accepted and was also in the process of returning the processed goods to M/s Alu Bond Enterprises. Mere non-following of the procedure, if at all, would not result in denial of credit. The shortages in respect of the other raw materials are marginal and keeping in view that the entire exercise is Revenue neutral, I find no favour that the impugned orders confirming demands against the appellants and confiscating the raw material and imposing penalty. Accordingly, the impugned orders are set aside - Decided in favour of assessee.
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