2005 (9) TMI 344 - AT - Central Excise

Summary

Issues:
- Application for waiver of pre-deposit of duty
- Utilization of credit taken in respect of Additional Excise Duty (AED) on Rubberized Tyre Cord Fabric (RTCF)
- Effect of Rule 3(6) of CENVAT Credit Rules, 2002
- Amendment by the Finance Act, 2004 regarding utilization of AED credit
- Dispute regarding the liability of AED
- Prima facie case for waiver of pre-deposit

Analysis:
1. The applicants filed an application seeking a waiver of pre-deposit of duty amounting to Rs. 2,08,48,009, which was demanded due to the alleged wrongful utilization of credit taken for Additional Excise Duty (AED) on Rubberized Tyre Cord Fabric (RTCF). The applicants argued that there was a dispute over the classification of RTCF, and they were liable to pay AED based on a Tribunal decision, which they appealed to the Supreme Court.

2. In January 2004, the applicants availed the AED as per the Tribunal decision, taking credit for the duty paid and using it for Basic Excise Duty (BED) under Rule 3(6) of CENVAT Credit Rules, 2002. They contended that the Board's Circular of 6-3-2003 allowed such utilization. Despite the amendment by the Finance Act, 2004, the applicants maintained that their credit utilization in January 2004 should not be affected by the new explanation added to the Rule.

3. The Revenue argued that although the duty was paid in 2004, it pertained to a period dating back to 1997, making the applicants ineligible to use the credit under the amended Rule. However, the Tribunal found that the AED was indeed paid and utilized in January 2004, aligning with the Rule's provisions at that time. The Tribunal noted that the applicants had a strong prima facie case for the waiver of the pre-deposit amount, given the circumstances and the amount in dispute exceeding two crore rupees.

4. Consequently, the Tribunal granted the waiver of the entire duty amount and stayed the recovery during the appeal's pendency. The applicants' appeal was listed for further proceedings, acknowledging their contention that the credit had been taken and not objected to by the Revenue. The Tribunal's decision was based on the timing of credit utilization, the pending appeal challenging the AED liability, and the lack of objections raised by the Revenue, leading to a favorable ruling for the applicants.