2008 (11) TMI 532 - AT - Central Excise

Stay/Dispensation of pre-deposit - CENVAT credit - duty paying invoices - whether the goods were liable to be accepted as received into the appellant s factory under Rule 16(1)?

Summary

Issues: Interpretation of Rule 16(1) of the Central Excise Rules 2002 regarding the admissibility of Cenvat credit on goods received into the factory.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the main issue revolves around the interpretation of Rule 16(1) of the Central Excise Rules 2002 concerning the admissibility of Cenvat credit on goods received into the factory. The Commissioner denied the benefit of Rule 16(2) to the appellants, arguing that Cenvat credit on the goods was not admissible, despite duty payment on the goods at the time of export clearance. The central question was whether the goods were rightfully accepted into the factory under Rule 16(1) for refining, remaking, reconditioning, or any other reason. The Commissioner applied the rule of ejusdem generis to interpret the phrase "or for any other reason," while the appellants contested this interpretation, citing precedents supporting a broader interpretation of the rule. The Tribunal's decision in a similar case favored the appellants, indicating that the expression "or for any other reason" had a wider connotation than "any other similar process" used in the previous rule.

The Tribunal analyzed the text of the order in the precedent case and found that the expression "or for any other reason" in Rule 16 was indeed broader in scope compared to the previous terminology. The case law supported the appellant's argument, further reinforced by the decision cited by the Counsel. Consequently, the Tribunal leaned towards the appellant's interpretation, indicating a favorable stance towards the admissibility of Cenvat credit on goods received into the factory under Rule 16(1). After considering the submissions, the Tribunal found merit in the appellant's case for waiver of pre-deposit and stay of recovery concerning the duty and penalty amounts, leading to an order in favor of the appellants.