AURO DYEING Vs. COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH

JUDGEMENT

(1.) THE appellants are manufacturers of processed fabrics chargeable to central excise duty and availed Cenvat credit in terms of the provisions of Cenvat Credit Rules, 2002/2004. The period of dispute in this case is from April, 2003 to December, 2004. The appellant for processing of fabrics require steam which was being generated within the factory by burning fuel. While a part of the steam was used within the factory, the remaining quantity of steam was being sold out. The appellant had taken cenvat credit of central excise duty paid on certain chemicals used in the boiler. However, on 19 -1 -2005, they reversed the entire credit of Rs. 84,783/ - on all the inputs on which cenvat credit had been taken. The Department, however, on 6 -8 -2007, issued a show cause notice stating that the appellant have not complied with the provisions of Rule 6(2) of the Cenvat Credit Rules, while they were using common Cenvat credit availed inputs for dutiable as well as exempted final products and hence, in respect of the clearances of steam (the exempted product), they would be required to pay under Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004, an amount @10% on the sale value. A show cause notice was issued for recovery of an amount of Rs. 26,50,695/ - along with interest and for imposition of penalty. The show cause notice was adjudicated by the Addl. Commissioner vide order -in -original dated 3 -3 -2008 by which the above -mentioned demand was confirmed along with interest. However, he did not impose any penalty. The appellant filed an appeal against confirmation of demand of Rs. 26,50,695/ - and the Revenue filed an appeal against part of the order dropping the penal proceedings. The Commissioner (Appeals) vide order -in -appeal dated 8 -9 -2008 upheld the demand of Rs. 26,50,695/ - under Rule 6(3)(b) along with interest. Besides this, he imposed penalty of equal amount on the appellant. Against this order of the Commissioner (Appeals), this appeal has been filed.

(2.) HEARD both the sides.

(3.) SHRI Yashpal Sharma, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner (Appeals).