2006 (12) TMI 434 - AT - Central Excise

Summary

Issues: Seeking waiver of pre-deposit under Rule 14 of CENVAT Credit Rules for goods removed during a specific period. Dispute over reversal of credit due to lack of separate accounts and subsequent notification of goods.

Analysis:
1. The appellant, a PSU Unit, sought waiver of pre-deposit of Rs. 19,44,64,354 for goods removed during a specified period. The appellant had only reversed a partial amount as per the order, leading to demands being confirmed, including interest and penalty.

2. The Senior Counsel argued that after the final products were notified, the appellant reversed the credit, but this was rejected due to the absence of separate accounts. Referring to a previous order, the Counsel contended that once credit availed and inputs were reversed as per rules, satisfying the demands was unnecessary. The Counsel asserted the ability to identify the quantity of inputs used in manufacturing the notified goods for reversal, unchallenged by the Revenue.

3. In contrast, the JDR contended that during the period in question, there was no notification regarding the goods in question, and common inputs were used without separate accounts, violating the Rules. Citing a specific case, the JDR argued that subsequent notification of goods would not rectify the non-compliance, emphasizing the importance of maintaining separate accounts.

4. The JDR further relied on precedents where similar situations led to non-reversal of credit due to the absence of separate accounts. The JDR cited cases like CCE, Mumbai v. Raymond Ltd., Binani Zinc Ltd. v. CCE, Cochin, and National Information Technologies Ltd. v. CCE, Bhopal to support the argument against granting credit without proper compliance.

5. The Tribunal noted that the appellant had reversed the credit before the Show Cause Notice was issued upon the notification of goods, with undisputed calculations. The Tribunal opined that despite procedural lapses, the appellant had prima facie satisfied the Rules by reversing the credit before the notice. Consequently, the Tribunal granted full waiver and stayed the recovery, allowing the appeal to proceed without recovery during the pendency of the case. The Tribunal emphasized the importance of procedural compliance but acknowledged the appellant's actions in reversing the credit promptly.

This detailed analysis of the judgment highlights the key arguments presented by both parties and the Tribunal's reasoning in granting the waiver and stay of recovery based on the compliance with the CENVAT Credit Rules.