The appellant viz., M/s.Saint Gobain Glass (I) Ltd (SGGL), is the manufacturer of glass. They are availing CENVAT credit on inputs, capital goods and input services under the CENVAT Credit Rules, 2004 (CCR 2004, in short). During the period from June 2005 to September 2006, they availed the credit of the service tax paid on freight incurred for the outward transportation of the final products from factory to customers' premises and utilized the same for payment of duty on final products; and they determined the duty on the basis of the price at factory gate, which did not include the above freight. While so, the department issued a show cause notice dated 27.11.2006, proposing to recover the credit amounting to Rs.1,73,53,490/along with Education Cess for the period in question as also to impose interest and penalty on them. The said proposal was put to challenge by the appellant/assessee, before the Commissioner of Appeals, who confirmed the said demand against the assessee under section 11A of the Central Excise Act along with interest under section 11AB and imposed penalty equal to tax + cess under section 11AC. Challenging the said order of the Appellate Authority, the appellant preferred further appeal before the CESTAT, which, after detailed analysis, decided the issue against the assessee and disposed of the appeal, by final order dated 13.07.2007, the relevant paragraphs of which, are usefully extracted below:
