2004 (10) TMI 359 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of duty and penalty

Analysis:
1. Waiver of Pre-deposit of Duty and Penalty:
- The appellant, M/s. Chennai Petroleum Corpn. Ltd., sought waiver of pre-deposit of duty amounting to Rs. 95,57,178/- and a penalty of Rs. 10 lakhs.
- The Advocate representing the Appellant argued that the petroleum products refined by them are moved through a pipeline for home consumption and export under bond. It was explained that during the process, a portion of High-Speed Diesel (HSD) flushes the pipeline and mixes with Superior Kerosene Oil (SKO), which is then diverted back for refining.
- The Advocate relied on Rule 16 of the Central Excise Rules, 2002, stating that the Appellant should be entitled to take Cenvat credit of the duty paid as the inter-mix of HSD used for flushing is re-processed/refined along with crude oil, making the process revenue-neutral.
- On the other hand, the Revenue argued that duty is payable as the HSD used for flushing the pipeline is considered removed from the factory, and Rule 16 would not be applicable since the goods were not initially cleared on payment of duty.
- The Tribunal acknowledged that the HSD, subject to excise duty, was indeed removed from the factory premises. It was held that the provisions of Rule 16 would not be applicable as the goods were not cleared initially on payment of duty.
- Consequently, the Tribunal directed the Appellant to deposit a sum of Rs. 30 lakhs within six weeks, with a waiver of pre-deposit for the remaining duty amount and the penalty. The recovery of the deposited amount was stayed during the appeal's pendency, with a compliance reporting scheduled for a later date.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi, provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the Tribunal's decision regarding the waiver of pre-deposit of duty and penalty.