2023 (9) TMI 518 - CESTAT CHENNAI

Reversal of cenvat credit wrongly availed - Extended period of limitation - demand with interest and penalty - appellant debited the excess credit availed amounting to Rs.2,20,756/- but did not pay the interest due on the same - whether duty for the second clearance should be made in terms of the first part of Rule 16(2) as demanded by the Revenue or as per the later part of Rule 16(2) as prayed for by the appellant - HELD THAT:- It is found from a plain reading of Rule 16(2) that if the first part of Rule 16(2) is applicable the second part will not apply. The phrase “in any other case” will not cover a case where no process of manufacture has taken place.

The facts of clearance involved in the present case is also the same. Goods which were initially cleared for home consumption and later found unfit for use were brought back to the factory and were then cleared as scrap without putting them to any further process amounting to manufacture. As no process was involved the first part of Rule 16(2) would come into play and the goods were to be cleared after paying an amount of duty equal to the CENVAT credit taken.

The appellant has stated that the lower authority had failed to see that there was no intention to evade payment of duty and the appellant had cleared the goods as rejected metal containers on payment of duty on the transaction value. Hence section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002 could not have been invoked - the wordings of Rule 16 of Central Excise Rules, 2002 does give room for interpretation and there has been no positive act of suppression that has been brought out on behalf of the appellant - the demand shall be limited to the normal period.

The impugned order upheld on merits - no grounds have been made for invocation of extended time limit - the imposition of penalty under sec. 11AC of the Central Excise Act, 1944 and sec. 25 of the Central Excise Rules, 2002 does not arise - appeal disposed off.