COMMISSIONER OF CENTRAL EXCISE Vs. H.K. MOULDERS

JUDGEMENT

(1.) In this appeal under Section 35G of the Central Excise Act, 1944 (the Act), the Appellant-revenue has challenged the order dated 22nd July 2008; 2008 (232) E.L.T. 703 (Tribunal) made by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal), by proposing the following question:

(2.) The facts of the case stated briefly are that the Respondent had availed the CENVAT credit of the duty paid on the inputs under the CENVAT Credit Rules, 2001 (the Rules). The Central Excise Audit Party, during the course of scrutiny of the records of the Respondent, noticed that during the period from 1-7-2001 to 10-2-2002, Respondent had availed CENVAT credit on the basis of invoices issued by a 100% Export Oriented Unit (EOU) viz. M/s. Elque Polyester Ltd., Falta EPZ, West Bengal. The said 100% EOU had availed the benefit of Notification No. 2/95-C.E., dated 4th January 1995 and had paid 50% of the total duty payable, whereas the Respondent had availed of CENVAT credit equivalent to the basic excise duty shown in the input invoices which according to the revenue was not admissible. According to the revenue in view of the provisions of Clause (a) of Sub-rule (6) of Rule 3 of the Rules since the supplier of the inputs had paid 50% of the additional duty (i.e. basic excise duty) on the goods cleared to the Respondent, the Respondent was eligible to take CENVAT credit equal to the actual additional duty paid by the supplier of the inputs i.e., 100% E.O.U. Therefore, CENVAT credit of Rs. 1,46,511/- wrongly availed by the Respondent was required to be recovered from the Respondent. Accordingly, a show cause notice came to the Respondent which came to be adjudicated vide Order-in-Original dated 27th August 2007, whereby the demand came to be confirmed along with interest. Penalty equivalent to the amount of duty also came to be imposed.

(3.) Being aggrieved, the Respondent preferred an appeal before Commissioner (Appeals), who vide order dated 29th November 2007 allowed the appeal. Revenue carried the matter in further appeal before the Tribunal which came to be dismissed.