2007 (4) TMI 416 - AT - Central Excise

Summary

Issues:
Interpretation of Cenvat Credit Rules, 2002 for availing credit on duty paid capital goods transferred under EPCG Scheme.

Analysis:
The appellant sought interim relief against the recovery under the impugned order of the Commissioner (Appeals) confirming duty demand under Section 11A of the Central Excise Act, 1944 read with Section 38 and Rule 12 of the Cenvat Credit Rules, 2002, and imposing penalty. The case involved the transfer of capital goods by Maruti Udyog Ltd. (MUL) to the appellant for manufacturing sheet metal parts, with MUL later paying differential duty under the EPCG Scheme. The appellant claimed that the supplementary invoices from MUL were valid duty paying documents under Rule 7(1)(b) of the Cenvat Credit Rules, 2002. However, the adjudicating authority held that MUL, having contravened Customs Act provisions, was not competent to issue the invoices, and the appellant had misrepresented the date of receipt of goods.

The Appellate Commissioner noted that the goods were transferred to the appellant for free, to manufacture components for MUL, and the supplementary invoices were issued after the import. It was found that as the capital goods were supplied for free, no gate pass or Central Excise invoice was issued, leading to the conclusion that no credit was admissible under Rule 57R(3) of the Central Excise Rules, 1994. The appellant argued that the Commissioner applied the pre-amendment version of Rule 57R(3), but the goods were received after the amendment, entitling them to credit. However, the amended Rule was not in force when the supplementary invoices were sent, and Rule 4(3) of the Cenvat Credit Rules, 2002 did not allow credit as the goods were not acquired under specified agreements.

The appellant also tried to rely on Rule 4(5)(b) regarding jigs, fixtures, etc., sent to a job worker, but it was evident from the supplementary invoice that the appellant was to be the vendor, not a job worker. The Tribunal held that the appellant failed to establish a case for total waiver of the pre-deposit of the duty demand. It was directed that upon depositing the confirmed duty demand amount, the penalty pre-deposit would be waived during the appeal's pendency, with dismissal if the duty pre-deposit was not made. The application was disposed of with a compliance report due on a specified date.