2006 (2) TMI 517 - AT - Central Excise

Summary

Issues:
1. Duty pre-deposit and penalty requirement.
2. Reversal of Cenvat credit for 'Work in progress'.
3. Interpretation of Rule 9 of Cenvat Credit Rules.
4. Appeal against the Commissioner's decision.
5. Grant of waiver of pre-deposit and stay of recovery.

Analysis:
1. The judgment addressed the issue of the appellants being required to pre-deposit duty of Rs. 8,62,604/- and a penalty of a similar amount. The department had taken steps to reverse the Cenvat credit concerning 'Work in progress'. The learned Counsel argued that as per Rule 9 of Cenvat Credit Rules, since the credit had lapsed automatically and was not utilized, there was no obligation to reverse or deposit the duty. The Counsel presented Order-in-Appeal No. 97/2005-CE dated 20-9-2005, where the Commissioner had dismissed the Revenue's appeal on this matter.

2. The judgment considered the interpretation of Rule 9 and noted that the credit had indeed lapsed regarding the use of inputs in Work in progress, as it was not utilized. Consequently, the obligation to deposit the duty did not arise. The Commissioner (Appeals) had also dismissed the Revenue's appeal on the same grounds. The appellants were found to have a strong case for the waiver of pre-deposit and the stay of recovery.

3. The Tribunal granted the stay application, allowing the matter to be heard before a Single Member Bench on 10th February 2006. It was explicitly stated that there should be no recovery until the appeal was disposed of. This decision provided relief to the appellants by recognizing the lapse of credit under Rule 9 and granting a waiver of pre-deposit and stay of recovery pending the appeal process. The judgment highlighted the importance of adherence to the rules and proper interpretation in resolving legal disputes effectively.