2007 (8) TMI 564 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and stay of recovery.
2. Disallowance of credit on capital goods.
3. Interpretation of Rule 3 of Cenvat Credit Rules, 2002.
4. Applicability of time limit for utilizing credit on capital goods.

Analysis:

Issue 1: The application sought waiver of pre-deposit of duty and stay of recovery of irregularly used Cenvat credit, interest, and penalty imposed under Section 11AC of the Central Excise Act, 1944. The Tribunal dispensed with the pre-deposit requirement and proceeded with the final disposal of the appeal.

Issue 2: M/s. SSTPL received an imported 'Autoconer' machine and claimed 50% CVD credit on the machine. The authorities disallowed the capital goods credit as the machine was used in manufacturing exempted final products. The Tribunal held that the relevant date for availing capital goods credit is the date of receipt in the factory, not the installation date, as per Rule 3 of Cenvat Credit Rules, 2002. The appellants were deemed eligible for the credit upon receiving the autoconer.

Issue 3: The appellant argued that eligibility for credit on duty paid capital goods should be determined based on the receipt date, citing relevant case law. The Tribunal agreed, emphasizing that the date of receipt in the factory is crucial for claiming such credit. The Tribunal rejected the reasoning that starting to avail exemption on final products later should disallow credit earned on the receipt date of the capital goods.

Issue 4: The Commissioner's reasoning was reiterated by the SDR, but the Tribunal disagreed. It emphasized that there is no time limit for utilizing credit on capital goods and that denial of credit due to not clearing any dutiable product was unfounded. The Tribunal set aside the impugned order disallowing credit and imposing a penalty, ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, overturning the order disallowing credit on capital goods and imposing a penalty. The decision was based on the interpretation of Rule 3 of Cenvat Credit Rules, 2002, emphasizing the importance of the receipt date for claiming capital goods credit and rejecting the notion of a time limit for utilizing such credit.