2008 (8) TMI 728 - AT - Central Excise

Summary

Issues:
1. Duty and penalty pre-deposit requirement for availing Cenvat credit on transferred inputs.
2. Eligibility of Cenvat credit for processes carried out on inputs transferred to another unit.
3. Time-bar defense against duty and penalty demands.
4. Consideration of Note 6 to Section XVI of the Central Excise Tariff Act in determining manufacturing processes.
5. Granting waiver of pre-deposit and stay of recovery till appeal disposal.

Analysis:
1. The appellant was required to pre-deposit duty and penalty for allegedly availing Cenvat credit on inputs transferred to another unit without permission. The Revenue contended that the processes on the inputs in the other unit did not constitute manufacturing, making them ineligible for Cenvat credit.

2. The appellant argued that the duty amount related to clearances to the other unit, while the penalty pertained to inputs subjected to processes not considered as manufacture by the Revenue. They claimed revenue neutrality and invoked the time bar defense, stating that the Show Cause Notice was issued beyond the one-year limit. The appellant asserted no suppression of facts and compliance with declarations to the department.

3. The Departmental Representative reiterated the Show Cause Notice points, emphasizing the irregular Cenvat credit availed by the appellant. The appellant's counsel referenced Note 6 to Section XVI of the Central Excise Tariff Act, asserting that the processes undertaken constituted manufacture, a point allegedly overlooked in the impugned order.

4. The Tribunal analyzed the submissions and found merit in the appellant's argument that processes like deburring, boring, blackening, etc., amounted to manufacturing under Note 6 to Section XVI. As the goods were exported, the appellant was deemed eligible for Cenvat credit. The Tribunal also acknowledged the time-bar defense, noting the Revenue's failure to address this issue specifically.

5. Consequently, the Tribunal allowed the stay application, waiving the pre-deposit requirement and staying recovery until the appeal's disposal. The stay order was to persist even after 180 days, and due to the substantial amounts involved, the appeal was scheduled for an expedited hearing on a specified date in 2008.