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2005 (4) TMI 221 - AT - Central Excise
Issues:
1. Entitlement to Modvat credit for explosives used in mines 2. Imposition of interest under Section 11AB of Central Excise Act Entitlement to Modvat Credit: The appeal was filed by the Revenue against the order-in-appeal allowing the benefit of Modvat credit for explosives used in mines. The Revenue argued that as per the definition of inputs under Rule 2 of Cenvat Rules, 2002, inputs must be goods used in the manufacture of the final product within the factory of production. Since the goods were not used within the factory, the respondents were not entitled to the credit. The Revenue relied on a Supreme Court decision to support their contention. The respondents, on the other hand, argued that the demand period was between August 2002 and March 2003 and that the adjudicating authority had also demanded interest under Section 11AB of the Central Excise Act. They contended that no interest should be imposed as there was no suppression, and the demand fell within the normal period of limitation. The Tribunal noted that the definition of inputs during the relevant period under Rule 2(a) of Cenvat Credit Rules, 2002 specified that inputs must be goods used in the manufacture of the final product within the factory of production. Since the inputs in this case were not used within the factory of production, the respondents were not entitled to the benefit of Cenvat credit. Additionally, since there was no suppression involved, the demand of interest under Section 11AB was deemed unsustainable. Consequently, the appeal was disposed of accordingly. Imposition of Interest under Section 11AB: The Tribunal found that since there was no suppression involved in the case and the demand fell within the normal period of limitation, the imposition of interest under Section 11AB of the Central Excise Act was deemed unsustainable. This decision was based on the specific circumstances of the case and the provisions of the law regarding the imposition of interest in such situations.
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