2006 (5) TMI 249 - AT - Central Excise

Summary

Issues:
1. Recovery of credit availed by the appellant company under CENVAT Credit Rules, 2001.
2. Imposition of penalty under CENVAT Rules.
3. Validity of supplementary invoices issued by M/s. Tinplate Company of India Ltd.
4. Pre-deposit amount directed by the Commissioner of Central Excise (Appeals).

Analysis:
1. The appellant company received a show cause notice for the recovery of credit amounting to Rs. 75,16,684.65 under Rule 12 of the CENVAT Credit Rules, 2001. The notice alleged that the credit taken based on two invoices issued by a supplier was irregular and not permissible under Rule 7 of the CENVAT Rules. The Commissioner of Central Excise (Appeals) directed the appellant to make a pre-deposit of Rs. 75.00 lakh and confirmed the recovery. However, the Tribunal found that the supplementary invoices were issued due to a differential duty arising from an incorrect computation, not due to ineligible documents. Therefore, the Tribunal granted a Stay Petition, waiving further pre-deposit and staying the recovery pending a regular hearing of the appeal.

2. The show cause notice also sought the imposition of a penalty under Rule 13 of the CENVAT Rules corresponding to the erstwhile Rule 173Q. The Commissioner reduced the penalty amount to Rs. 1.00 lakh. However, the Tribunal's analysis focused on the validity of the credit availed, and no specific mention was made regarding the penalty amount or its imposition. The Tribunal's decision primarily revolved around the recovery of credit and the validity of the supplementary invoices.

3. The issue of the validity of the supplementary invoices issued by M/s. Tinplate Company of India Ltd. was crucial in determining the eligibility of the credit availed by the appellant. The Tribunal found that the supplementary invoices were issued due to a miscalculation of duty under a wrong formula, resulting in a lower assessable value. The Tribunal concluded that there was no evidence to suggest that the invoices were ineligible for claiming duty credit. This finding played a significant role in the Tribunal's decision to grant the Stay Petition and halt the recovery process.

4. The Commissioner of Central Excise (Appeals) had directed the appellant company to make a pre-deposit of Rs. 75.00 lakh, which was later reduced to Rs. 1.00 lakh for the penalty amount. However, the Tribunal's detailed analysis focused on the validity of the credit availed and the supplementary invoices, leading to the decision to grant a Stay Petition and waive further pre-deposit pending the regular hearing of the appeal. The Tribunal's decision effectively suspended the recovery process and allowed for a more thorough examination during the appeal proceedings.