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Shah Paper Mills Ltd. Versus Commissioners of Central Excise, Customs and Service Tax-Daman

2015 (12) TMI 1103 - CESTAT AHMEDABAD

Denial of concessional rate of duty - Due to shortage of space, the appellant kept the imported materials partly adjacent to the factory premises - demand of cenvat credit alongwith interest and imposed penalty of equal amount - Held that:- Adjudicating Authority had observed that there was a procedural lapse of not applying to the Dy. Commissioner under Rules 8 of Cenvat Credit Rules 2004 for keeping waste paper in the go-down adjacent to the factory. It is further observed that, it is not a pr .....

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r. The proviso to Rule 8 states that, if such input is not used in the manner specified in the rules, the manufacturer of the final products shall pay an amount equal to the credit availed therein. In my considered view, the demand of cenvat credit would arise if the manufacturer fails to establish that the input in question was not used in the manufacture of final products. - impugned order is modified to the extent that the demand of Central Excise duty of ₹ 8,99,996/- alongwith interest .....

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s. 2. The appellant was engaged in the manufacture of Craft Paper classifiable under Chapter 48 of the Schedule to the Central Excise Tariff Act 1985. During the period from 2006 to 2007 they received imported Waste Paper under concessional rate of duty for use in the manufacture of final product. Due to shortage of space, the appellant kept the imported materials partly adjacent to the factory premises. On 8th of August 2006, a fire occurred in the storage place adjacent to the factory. The app .....

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sions of the Rule 8 of Cenvat Credit Rules 2004. The appellant reversed the credit of ₹ 8,99,966/-in respect of the goods destroyed during the fire before issue of the show cause notice. The Adjudicating authority confirmed the demand of cenvat credit alongwith interest and imposed penalty of equal amount. The matter went upto the Tribunal. By order No S/273/WZB/AHD/2009, A/344/WZB/AHD/2009 dtd 20.1.2009, the Tribunal remanded the matter to the Adjudicating Authority for de-novo adjudicati .....

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y of ₹ 6,03,392/- alongwith interest and the penalties imposed under Section 11AC of the Act. He submits that the Adjudicating Authority demanded duty on the ground that the procedure under Rule under 8 of the Cenvat Credit Rule 2004 was not followed. It is submitted that proviso to Rule 8 clearly stated that the demand will be raised, if such input storage outside of the factory was not utilized in the final product. In the present case, it is revealed from the certificate dtd 30.11.2006 .....

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ccurred in the go-down. 5. On the other hand, the learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the appellants removed the duty paid inputs from their factory premises without the permission of the Dy Commissioner, Central Excise, which is violation of Rule 8 of the Central Excise Rules. So, they are bound to reverse the credit and therefore, the demand of cenvat credit is justified. He further submits that the a .....

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oner under Rules 8 of Cenvat Credit Rules 2004 for keeping waste paper in the go-down adjacent to the factory. It is further observed that, it is not a procedural lapse but, clear violation of the said Rules. The appellant is a Limited company in organized sector and they should have obtained proper permission to store the imported waste i.e., inputs, outside the factory premises. For the proper appreciation of the case, Rule 8 of the Cenvat Credit Rules is reproduced below: 8. Storage of input .....

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, subject to such limitations and conditions as he may specify: Provided that where such input is not used in the manner specified in these rules for any reason whatsoever, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such input. 7. On plain reading of Rule 8 of Cenvat Credit Rule 2004, it is clear that the assessee is entitled to storage of inputs outside the factory of the manufacturer, subject to the permission from the Dy. Commissioner, .....

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