2008 (11) TMI 577 - AT - Central Excise

Stay/Dispensation of pre-deposit - Cenvat/Modvat - Special Additional Duty (SAD) paid through debiting the same in DFEC, DEPB and Target Plus Schemes

Summary

Issues:
1. Requirement of pre-deposit of Rs. 78,86,289
2. Applicability of Cenvat credit on duty debited under various schemes
3. Interpretation of relevant Notifications and Circulars

Analysis:
1. The judgment addressed the issue of the appellant being required to pre-deposit an amount of Rs. 78,86,289 in accordance with the impugned order. The Customs Department initiated proceedings against the appellant after an audit revealed discrepancies in taking Cenvat credit of duty debited under different schemes. However, after considering the arguments presented by both sides, the Tribunal found that the appellant had a strong case in their favor on merits. Consequently, the Tribunal ordered a complete waiver of the pre-deposit amount and stayed its recovery until the appeal's disposal.

2. The Tribunal delved into the issue of whether the appellant could legitimately take Cenvat credit of the amount debited under schemes like Duty Free Entitlement Credit (DFEC), Duty Entitlement Pass Book (DEPB), and Target Plus Scheme. The appellant's advocate highlighted relevant Notifications and Circulars, including the Board's Circular No. 27/2006-Cus. and Para 3.7.7 of the EXIM Policy, which supported the appellant's position. On the other hand, the departmental representative referred to an earlier circular with a contradictory stance. Upon careful examination of the documents, the Tribunal was convinced that the appellant had a prima facie strong case in their favor regarding the admissibility of Cenvat credit on the duty debited under the schemes.

3. The judgment also involved an analysis of the interpretation of relevant Notifications and Circulars governing the admissibility of Cenvat credit on duty debited under specific schemes. The Tribunal considered Circulars issued by the Board and the EXIM Policy to determine the legality of the appellant's actions in taking Cenvat credit. By comparing different circulars and policies, the Tribunal concluded that the appellant's position was supported by the provisions outlined in the Circular No. 27/2006-Cus. and Para 3.7.7 of the EXIM Policy, leading to the decision to waive the pre-deposit amount and stay its recovery pending the appeal's resolution.