2009 (8) TMI 883 - AT - Central Excise

Summary

Issues:
1. Application for waiver of pre-deposit of balance duty amount.
2. Interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 regarding reversal of credit availed on capital goods removed from the factory.

Analysis:
1. The judgment addresses the application for waiver of pre-deposit of balance duty amount, where the appellants sought relief from paying approximately Rs. 25 lakhs out of the total duty demand of Rs. 42,15,595 confirmed against them. The issue revolved around the credit availed on capital goods removed from the factory between specific dates, with a partial amount already paid by the appellants. The tribunal considered the request for waiver in light of the pending appeal and directed the appellants to deposit Rs. 10,00,000 within 8 weeks to stay the recovery of the balance amount, interest, and penalties pending the appeal. Non-compliance would lead to vacation of stay and dismissal of the appeal.

2. The second issue focused on the interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 concerning the reversal of credit availed on capital goods removed from the factory. The tribunal analyzed the language of the rule, which mandates the manufacturer to pay the amount equal to the credit availed when capital goods are removed. The department contended that the appellants were required to reverse the full credit amount, while the appellants had only reversed a portion based on the sale value of the goods. The tribunal found that prima facie, the appellants were obligated to reverse the full credit amount as per the rule, and their method of payment based on transaction value contradicted the rule's provisions. Therefore, the tribunal concluded that there was no strong prima facie case for unconditional stay, leading to the directive for the deposit mentioned earlier to stay the recovery pending the appeal.

In summary, the judgment dealt with the application for waiver of pre-deposit of duty amount and the interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 regarding the reversal of credit availed on capital goods removed from the factory. The tribunal directed the appellants to make a specified deposit to stay the recovery pending the appeal and highlighted the requirement to comply with the directive to avoid dismissal of the appeal.