2004 (9) TMI 464 - AT - Central Excise

Summary

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

Analysis:
1. Issue of Waiver of Pre-Deposit: The case involved an application by M/s. Haldia Petrochemicals Ltd. for the waiver of pre-deposit of Central Excise duty amounting to a significant sum along with an equivalent penalty. The appellant argued that they had established a petrochemical complex and a Combined Cycle Co-generation Electricity Plant within their factory premises. The power plant was owned by a separate company, HPL Cogeneration Ltd., with whom they had entered into an agreement for the supply of fuel for electricity and steam generation. The Commissioner had demanded duty on the quantity of CLS (Cracked Liquid Stream) supplied to the power plant, considering it as a new product attracting duty. The appellant contended that as per Rule 2(f) of Cenvat Credit Rules, the duty was not payable on CLS as it was used as fuel for electricity and steam generation. They also relied on precedents to support their argument that the loss of identity of inputs after processing by a job worker should not deny the credit to the principal contractor.

2. Rule Interpretation and Prima Facie Case: The appellant's advocate argued that under Rule 4(5) of the Cenvat Credit Rules, inputs could be sent for processing to a job worker and received back, without the requirement that the processed goods must be excisable. It was emphasized that the electricity generated was indeed used in the manufacture of final products, reinforcing the connection between the input and the manufacturing process. On the other hand, the Respondent contended that the benefit of Rule 4(5) would not apply as what was returned from the power company was electricity, not excisable goods. After considering the submissions from both sides, the Tribunal found that the appellant had made a strong prima facie case for the waiver of the entire amount of duty and penalty. The Tribunal, therefore, stayed the recovery of the duty and penalty during the appeal's pendency, setting a date for a regular hearing.

This detailed analysis of the judgment highlights the key arguments presented by both parties regarding the waiver of pre-deposit of Central Excise duty and penalty, the interpretation of relevant rules, and the Tribunal's decision to stay the recovery of the duty and penalty based on the appellant's prima facie case.