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TMI Blog2010 (8) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... s chargeable to Central Excise Duty under Chapter 87 of the Central Excise Tariff. They availed Cenvat credit on various inputs used in or in relation to the manufacture of the finished product. The appellant's factory was visited by the Jurisdictional Central Excise officers on 21st May 2002 and their records were checked, in course of which the following irregularities were noticed : (i) the lubricants used in the plant and machinery after use for some period of time become unfit for further use and the same are drained out and sold as waste oil. The department was of the view that this waste oil was chargeable to Central Excise Duty under Heading 34.03 of the Tariff but the same was cleared without payment of duty and thus duty am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envat credit alongwith interest and also for imposition of penalty on the appellant. The duty/Cenvat credit demand is for the period from 1998-99 to 2001-02. However, even before the issue of show cause notice, the appellant had paid the entire demand of duty and Cenvat credit amounting to Rs. 18,83,585/-. 1.3The show cause notice was adjudicated by the Additional Commissioner vide order-in-original No. 5/Addl/Commr/2004 dated 16-1-04 by which the various demands of duty and of Cenvat credit raised in the show cause notice were confirmed alongwith interest, the amount of Rs. 18,83,585/- paid by the appellant was appropriated towards this demand and beside this, penalty of Rs. 18,83,585/- was imposed on the appellant under Section 11AC of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty to Rs. 50,000/- and upheld the interest liability only on the duty demand of Rs. 10,12,281/-. While the appellant have filed the appeal No. E/5701/04-EX against the Commissioner (Appeals)'s order challenging upholding of penalty and interest, the department has filed appeal No. E/5985/04-EX against the same order of the Commissioner (Appeals), challenging the setting aside of duty demand on waste oil and reduction of penalty to Rs. 50,000/-. The department in its appeal has also challenged the Commissioner (Appeals)'s order, ordering refund of Rs. 8,50,966/- and also the Commissioner (Appeals)'s order reducing the interest liability of the appellant to the interest on the duty amount of Rs. 10,12,281/- whose demand had been upheld b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of the processed inputs involving Cenvat credit of Rs. 8,50,966/- and when on this basis, the Commissioner (Appeals) had set aside the demand for this amount and ordered the refund of the same, this amount should be allowed to be re-credited, that there is no merit in the department's plea that the same cannot be refunded/returned, that since there was no intention to evade the duty payment or wrongly avail the Cenvat credit and since the entire disputed amount of Cenvat credit and duty had been paid even before the issue of show cause notice, there is no justification for charging interest and imposition of penalty of Rs. 50,000/- on the appellant and that there is no merit in the department's appeal for seeking enhancement of the pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on the inputs which had been damaged and had not been used, was wrongly taken by the appellant and that too without informing the department about the same and that in view of this, the Commissioner (Appeals)'s order dropping the duty demand in respect of waste oil, reducing the penalty on the appellant and reducing their interest liability is incorrect. 3.We have carefully considered the submissions from both the sides and perused the records. 3.1 So far as duty on the waste oil is concerned, the waste oil is nothing but the lubricant which after use over a period of time becomes unfit for further use and is drained out. The department has relied upon the Tribunal's judgment in the case of Panama Petro Chem Pvt. Ltd. v. CC, Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l obtained by draining out used lubricants from the machinery after a long period of its use, does not answer to the description of the goods covered by heading 34.03. In view of this, we hold that there is no infirmity in the Commissioner (Appeals)'s order dropping the demand on the waste oil. 3.2 As regards the Cenvat credit demand of Rs. 13,28,079/- in respect of cenvated inputs sent to job workers for processing under job work challans, which according to the department, were not returned back within the stipulated period, we find that in course of hearing before the Commissioner (Appeals), the appellant were able to produce job work challans showing return of the inputs involving Cenvat credit of Rs. 8,50,966/- and on this basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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