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2015 (10) TMI 1931 - CESTAT CHENNAI

2015 (10) TMI 1931 - CESTAT CHENNAI - TMI - Denial of cenvat credit - Reclassification of goods - final product was exempted from duty - On being pointed out for wrong availment, assessee revered the credit by debiting in their RG 23A Part-2 - held that:- Classification issued was decided by the Dy. Commissioner of Central Excise in 23.6.2002 whereas the SCN of denial of cenvat credit was decided by the Addl. Commissioner subsequently on 31.03.2003. Though the appellants contended before the adj .....

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n paid the duty on 30.03.2004. We find that the appellants initially availed the credit when the final product was exempted but when the department re-classified the product Covered spandex yarn form ch. 5205.90 to ch. 5205.11, the final product becomes chargeable to duty, and the appellants eligible for cenvat credit on the inputs used in the said final product. Once the department demanded duty on the final products at a later date by changing classification the appellants are eligible for mod .....

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ore they are liable for penalty under Rule 25. - Decided partly in favour of assessee. - E/1166/2004 - Dated:- 4-9-2015 - Shri R. PERIASAMI, Technical Member And Shri P.K. CHOUDHARY, Judicial Member Shri M. Kannan, Adv. : For the applicant Shri B.Balamurugan, AC (AR) : For the respondent ORDER: Per: R. Periasami The present appeal is filed against the OIA dated 22.07.2004. The short issue involved in this case relates to denial of cenvat credit availed by the appellant on the inputs Lycra Spande .....

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ore SCN dated 08.01.2002 was issued proposing denial of cenvat credit. Parallaly the department also issued another SCN dated 07.01.2002 proposing to re-classify their final product Covered spandex yarn from ch. 5205.90 to ch. 5201.11of CET which is chargeable to duty @ 16%. The SCN pertaining to the classification and demand to duty was confirmed by the adjudicating authority vide order No. 124/2005 dated 23.06 .2003, the Covered spandex yarn was re-classified under ch. 5205.11 and confirmed t .....

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the demand by reversal of credit already made by the appellants and imposed equivalent penalty under Section 11AC read with 173Q and also imposed penalty of ₹ 90,663/- under Section 11AC read with Rule 25. The Commissioner (Appeals) in the impugned order uphold the demand and held the OIO in so far as reversal of credit and upheld the penalty of ₹ 90,663/-. However, he set aside the equivalent penalty imposed under 11AC but imposed penalty of ₹ 10,000/- under Rule 173Q. Hence .....

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fact was brought to the notice of the adjudicating authority as well as before the appellate authority and the same was not considered by them. He submits that there were two SCNs issued simultaneously dated 07.1.2002 and 8.1.2002 for demand & denial of credit. When the classification issue was decided by the order dated 23.06.2002 the 2nd SCN denying cenvat credit should have been dropped automatically. He relied on the following decisions in support of his contention. 1. Reckitt Bencksier .....

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ble for credit during the relevant period. They also utilized the credit of ₹ 90,663/- ineligible credit towards payment of credit on viscose/polyester yarn and the demand was rightly confirmed by the adjudicating authority. 5. After hearing both sides, we find that the short issue involved in this case is denial of cenvat credit on the grounds that final product was exempted from duty. The Department issued SCN. The present appeal had arisen ort of SCN issued for denying cenvat credit on .....

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er ch. 5205.11 and also confirmed the demand of duty of ₹ 21,02,638/-. In the said findings on admissibility of cenvat credit on the inputs used in the final products, which has now become dutiable on account of change of classification by the Department. We also find that the classification issued was decided by the Dy. Commissioner of Central Excise in 23.6.2002 whereas the SCN of denial of cenvat credit was decided by the Addl. Commissioner subsequently on 31.03.2003. Though the appella .....

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