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2018 (11) TMI 1273 - AT - Central ExciseCENVAT Credit - finished goods or not - welding electrodes, Saw Flux, Saw Wire, Filler Wire and CO2 wire alongwith Flux Cored Wire - these goods were never received physically in the unit of Appellant No.1, but were cleared directly from the unit of Appellant No.2 to the customers - denial of credit on the ground that no manufacturing process taking place - principles of natural justice - time limitation - penalty. Held that:- The record about receipt of goods in the factory of Appellant No.1 alongwith the record of Appellant No.2 was well produced on record. It appears that the adjudicating authority is miserably silent about scrutinising the said record. It is, therefore, opined that the adjudicating authority has committed an error while merely relying upon the lease agreement about manufacturing setup to have been leased out to the Appellant No.2 - The factum of converting the semi-finished goods into finished one by the Appellant No.1 itself and the factum of presence of the set-up about ovenizing and packing required for converting the products into finished states with Appellant No.1 as well has miserably been ignored. Irrespective that the process of said ovenizing and packing may not amount to manufacture but the apparent and admitted fact remains is that Appellant No.1 only had paid the Excise duty while clearing the goods which were received from Appellant No.2 in semi-finished state. Once the Department has accepted the duty on goods, Cenvat Credit ought not to be denied by them irrespective the procedure is not that of the manufacture - The situation stands clarified by the Departments’ own Circular No.911/01/2010 – CX dated 14.01.2010. In the present case, the Cenvat Credit availed is ₹ 2,05,59,139/- against the Central Excise duty of ₹ 2,20,67,060/- on the goods cleared by the Appellant No.1. The duty paid stands more than the credit availed. Seen from this angle also, there is no loss to the Revenue. This has also been overlooked by the adjudicating authority below. Time limitation - intent to evade not present - penalty - Held that:- Even if, the Appellant No.1 was not doing any activity which amounts to manufacture, but he has paid the excise duty while clearing the goods from his premises and the Cenvat Credit availed by him is lesser than the amount of said duty availed, the question of evasion of tax is not sustainable - Once, there is no evasion, the intent of evasion has no existence. For the same reason, the question does not arise for the alleged wilful suppression or mis-representation of the fact - penalty not warranted and is set aside - SCN also barred by time. Appeal allowed - decided in favor of appellant.
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