2016 (12) TMI 1218 - AT - Central Excise

Cenvat credit - Penalty - Rule-15 (1) of the Cenvat Credit Rules 2004 - Held that - It is the case of the appellant that on 7 items out of 13 disputed items credit has already been allowed by subsequent orders dt 30/7/14 & 31/12/2015 passed by Jurisdictional Joint Commissioner & Additional Commissioner which have been accepted by the department - Appellant has also produced a Chartered Engineer s certificate dt 16/05/16 before the bench explaining the use of each item. It is a case of interpretation of the provisions of CCR & appellant had a view on admissibility of Cenvat Credit it is opined that this is not a fit case where imposition of penalty under Rule 15(1) is justified - Appeal allowed by way of remand.

Summary

Issues:
- Disallowance of Cenvat Credit and penalty imposition under Rule-15(1) of Cenvat Credit Rules 2004.
- Dispute regarding Cenvat Credit on specific items.
- Availability of Chartered Engineer's certificate and orders-in-original copies before the Adjudicating authority.
- Imposition of penalty on the appellant.

Analysis:
1. The appeal was filed against the disallowance of Cenvat Credit amounting to Rs. 7,75,954 and the imposition of a penalty under Rule-15(1) of the Cenvat Credit Rules 2004. The appellant contended that the dispute remained concerning the Cenvat Credit on specific items, such as Gland packing, Armed Cable, Non-ASB (Gasket), Actuator Repair Kit, etc. The appellant argued that credit for some items had already been allowed by other adjudicating authorities, supported by a Chartered Engineer's certificate and relevant case law.

2. The Revenue argued that the Chartered Engineer's certificate and orders-in-original copies were not available before the Adjudicating authority during the initial decision. The Revenue defended the order passed by the Adjudicating authority, highlighting the appellant's purported lack of clarity in explaining the use of the items.

3. The main issue in the appeal was whether the appellant was entitled to Cenvat Credit on the disputed items claimed to be used as capital goods. The appellant presented evidence of credit being allowed on some items by other authorities, along with a Chartered Engineer's certificate explaining the use of each item. The case was remanded to the Adjudicating authority to reevaluate the eligibility of Cenvat Credit on the disputed items in light of the additional documents and case laws presented.

4. Regarding the imposition of a penalty, it was noted that only a portion of the initially proposed demand was denied, and credit for some items had been allowed by other Adjudication authorities. Given that it was a matter of interpretation of the Cenvat Credit Rules, the imposition of a penalty under Rule 15(1) was deemed unjustified. The appeal was allowed in this regard, and the case concerning the eligibility of Cenvat Credit was remanded to the Adjudicating authority for further review based on the new evidence presented.

5. In conclusion, the appeal was partially allowed, with the matter of Cenvat Credit eligibility on disputed items being sent back to the Adjudicating authority for reconsideration. The imposition of a penalty on the appellant was deemed unjustified in the context of interpretational disputes related to the Cenvat Credit Rules.