2007 (3) TMI 655 - AT - Central Excise

Summary

Issues:
1. Duty credit on inputs for captive consumption.
2. Eligibility for credit based on previous tribunal decision.
3. Financial hardship plea for waiver of duty and penalty.

Issue 1: Duty credit on inputs for captive consumption
The appellant company manufactured POY, using part for sale as POY and the rest for captive consumption to produce PTY. The appellant raised invoices indicating duty payable on POY used for captive consumption, taking credit in RG-23A without actually paying duty on the inputs. The Commissioner held that since no duty on inputs was paid initially, taking credit and using it for NCCD on POY was not valid. The Tribunal noted that no NCCD was payable on clearances of POY due to an exemption. The appellant's method of indicating duty payable on POY and taking credit without paying duty on inputs was deemed fraudulent. The Tribunal found the appellant did not establish a prima facie case for total waiver of duty, imposing a significant liability and penalty. Despite the appellant's financial hardship plea, the Tribunal directed a partial deposit of Rs. 1,50,00,000 within 8 weeks, failing which the appeal would be dismissed.

Issue 2: Eligibility for credit based on previous tribunal decision
The appellant argued eligibility for credit based on a previous Tribunal decision in Silvasa Industries Pvt. Ltd. v. CCE, Vapi. However, the Tribunal found this argument misconceived as no NCCD was paid on the inputs in the present case. The Tribunal emphasized that even if NCCD was paid, the credit could only be used for NCCD payment as per the Cenvat Rules, particularly Rule 3(7). The Tribunal highlighted that the provision in the Silvasa Industries case did not consider Rule 3(7). Consequently, the Tribunal held that the appellant failed to establish a prima facie case for the total waiver of duty as per the order-in-original.

Issue 3: Financial hardship plea for waiver of duty and penalty
The appellant pleaded financial hardship and presented a balance sheet showing losses. Despite this, the Tribunal observed that the company had sufficient current assets, cash, bank balances, and loans to meet the dues. Considering the total liability of around Rs. 5 crores, the Tribunal directed a partial deposit of Rs. 1,50,00,000 within 8 weeks, with a waiver of the balance duty and penalty pending the appeal's disposal. The Tribunal emphasized the need for compliance by the specified date and stayed the recovery of the remaining duty and penalty until the appeal's resolution.