2007 (11) TMI 537 - AT - Central Excise

Summary

Issues involved: Stay petition to dispense with pre-deposit of duty and penalty u/s Rule 57CC for non-availing credit of duty on common inputs.

The Appellate Tribunal CESTAT, AHMEDABAD heard a case where the appellant, engaged in manufacturing Starch and Starch products, sought to dispense with the condition of pre-deposit of duty and penalty imposed u/s Rule 57CC. The Commissioner confirmed the demand but acknowledged that the appellant was not availing credit of duty on common inputs like Hydrochloric Acid and Caustic Soda Lye for dutiable products. However, the Commissioner did not grant the benefit, citing non-compliance with Rule 6 due to lack of separate storage for inputs used in both dutiable and exempted products.

The Tribunal noted that the appellant did not avail credit on inputs for exempted products despite using only 10 to 12% of such inputs. Referring to the Supreme Court's decision in Chandrapur Magnet Wires (P) Ltd., it was established that non-availing of credit on inputs used in final product manufacturing is compliant with Modvat rules, even without separate storage facilities for different types of inputs.

After considering the arguments, the Tribunal found that the appellant had a strong prima facie case in their favor regarding the non-availing of credit on common inputs. Consequently, the Tribunal ordered to allow the stay petition unconditionally.

*(Pronounced in Court)*