The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed penalty on Director as the Cenvat credit of input Sponge Iron was utilized in the manufacturing of the finished goods of Pig Iron.
The officers of the department visited the factory of the appellant, M/s. Anjaney Ispat Limited
and it was revealed from the RG-23 Register maintained by them that they have received the input ‘Sponge Iron’ and availed Cenvat credit on the same. But, the Charging Report does not reflect the quantity of Sponge Iron charged in the Blast Furnace. Thus, the officers were of the view that ‘Sponge Iron’ was not required for manufacture of Pig Iron and the appellant has wrongly taken the credit on the ‘Sponge Iron’ as their input without using the same in the manufacture of Pig Iron.
The Adjudicating authority decided all the three show cause notices and confirmed the demands made in the notices. Penalty equal to the duty was also imposed on its Director, Uday Singh, under Rule 15(1) of the Cenvat Credit Rules, 2004. The present appeals filed by the Appellants are against this impugned order.
In their submission, the appellant contended that Tata Steel did not supply all inputs required for manufacture of Pig Iron and they supplied short quantity of Coke in terms of the Agreement. They have to purchase other inputs from the market for manufacturing Pig Iron. Sponge Iron was also one of the inputs purchased by them as it helped in reduction of Coke consumption.
The appellant stated that, Uday Singh has mentioned that approximately 152-200 of Kg. of Sponge iron is used for manufacture 1 M.T. Pig Iron. In the Central Excise Registration, the appellant had mentioned only major inputs, which cannot exclude the use of other inputs. The appellant submitted that they had correctly taken Cenvat credit on inputs used in manufacturing of pig iron and hence they prayed for setting aside the impugned order.
A Two-Member Bench of the Tribunal comprising P.K Choudhary, Technical Member and K Anpazhakan, Judicial Member observed that “The duty paid nature of the Sponge Iron was also not in dispute. Since receipt, utilization and duty paid nature of the input Sponge Iron was not in dispute, we hold that the Appellant are eligible for the Cenvat credit of the input Sponge Iron, as the same has been utilized in the manufacturing of finished goods Pig Iron. We observe that there was no violation committed by the Director Uday Singh. Thus, we hold that no penalty is imposable on the Director under Rule 15(1) of Cenvat Credit Rules, 2004.”
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