STERLITE INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are manufacturers of Copper anode and by -products. The main raw material for these products is Copper concentrate, which is imported. The appellants are availing Cenvat credit of countervailing duty paid on this raw material. Investigators of the Department found that, from Oct.'02 to Mar.'03 and from Apr.'03 to Mar.'04, the appellants had taken CENVAT credits of. CVD on the quantities of Copper -concentrate -samples drawn for testing. It appeared to the Department that these quantities were not used in, or in relation to, the manufacture of Copper anodes and hence the CENVAT credits were not admissible to the assessee. On this basis, two show -cause notices were issued for the above two periods. A total credit of Rs. 3,750/ - was directed to be reversed for the entire period. These reversals were made before the case was adjudicated by the original authority. The authority, however, imposed a penalty of Rs. 3,750/ - on the assessee under Section 11 AC of the Central Excise Act read with Rule 13 of the CENVAT Credit Rules, 2002. This penalty was sustained by the first appellate authority also. Hence the present appeal.

(2.) THE appellants are not disputing their liability to reverse the CENVAT credit in question in view of Final Order No. 1517/2005 dated 30.11.2005 passed by this Bench in their earlier appeal (E/1328/2004), wherein it was held that the assessee was not entitled to avail input -duty credit on the samples of Copper concentrate used up for testing in their laboratory. In the said case, penalty was reduced from Rs.15,000/ - to Rs. 5,000/ -. Contextually, it needs to be mentioned that was a case in which the extended period of limitation was invoked against the assessee unlike in the instant case. Following the precedent cited by ld. Counsel and having regard to the fact that none of the show -cause notices involved in the present case had alleged any fact relevant to the proviso to Section 11 A(1) of the Central Excise Act, I vacate the penalty imposed on the appellant. The appeal stands allowed to the limited extent of setting aside the penalty.