MUMBAI, : THE appellant purchased inputs and used them in the
manufacture of furnace in the factory through contractor M/s. Bharat
Gears Ltd. Revenue proposed denial of CENVAT Credit on the ground that
in respect of the furnace manufactured, erected and installed in the
factory of the
appellant, no excise duty was paid and, therefore, CENVAT
credit is not admissible.
The adjudicating authority
confirmed the demand of Rs.2,96,017/- and imposed penalty of equal
amount. He,however, dropped the demand of interest.
In
their appeal, the appellant pleaded for waiver of penalty as they had
paid CENVA Tamount denied by the adjudicating authority. The
Commissioner(A) was not amused. He not only rejected the appeal for
waiver of penalty but also demanded interest under Rule 14 of CCR.
The
appellant is before the CESTAT. They did not contest the CENVAT credit
denial but are aggrieved by the imposition of penalty and interest.
None appeared on behalf of the appellant nor did they make any request for adjournment.
The
AR reiterated the findings of the lower appellate authority and
submitted that once the demand stands confirmed, penalty and interest
cannot be waived.
The Bench inter alia observed –
Merits:
The
appellant have taken credit on the inputs which was used in the
manufacture of erection and installation of the furnace within the
factory of the appellant. Revenue denied the Cenvat credit only on the
ground that no duty was paid on the furnace either by the appellant or
contractor i.e. M/s. Bharat Gears Ltd, therefore, credit for input used
for manufacture of erection and installation of the furnace is not
admissible. I do not agree with this contention of the Revenue for the
reason that the furnace is specified capital goods as per the definition
provided under Cenvat Credit Rules, 2002. Inputs on which Cenvat credit
was availed were indeed used in manufacture of erection and
installation of the furnace, in terms of definition of inputs, input
includes the goods used in the manufacture of capital goods and if such
capital goods used within the factory for manufacture of dutiable goods.
In such case, the furnace was exempted under Notification No. 67/95-CE
but input used in manufacture of such furnace is clearly covered under
the definition of input, therefore, the credit on the input used in the
manufacture of furnace is admissible. However, appellant has not
disputed the denial of Cenvat Credit and paid the said amount admittedly
and not contested.
Penalty:
Since the Cenvat Credit was otherwise admissible, penalty should not have not been imposed, therefore, I set aside the penalty.
Interest:
As
regard the interest demanded by the Commissioner (Appeals) in his
order, I find that the adjudicating authority in his order explicitly
dropped the demand of interest against which Revenue has not filed any
appeal before the Commissioner (Appeals), therefore, the said portion
related to interest of the order attained finality and since no appeal
was filed by the Revenue, Commissioner(Appeals) should not have passed
any order in respect of interest. For this reason the interest demanded
by the Commissioner(Appeals) in his order is hereby dropped.
The appeal was allowed in above terms.