2007 (3) TMI 89 - AT - Central Excise

Stay /Dispensation of pre deposit Appellant contended that they had reversed the credit availed on the inputs which have gone into manufacture of by-products and therefore the question of depositing 8% of the value of goods does not arise Held that appellant contention is correct

Summary

Issues:
1. Requirement of pre-deposit of duty amount on exempted by-products.
2. Applicability of previous judgments in similar cases.
3. Interpretation of Larger Bench judgment on common inputs for excisable and exempted products.
4. Consideration of Supreme Court judgments in related cases.

Analysis:

Issue 1: Requirement of pre-deposit of duty amount on exempted by-products
The appellants were directed to pre-deposit a duty amount of Rs. 37,16,263, being 8% of the value of excisable but exempted by-products cleared by them under Notification No. 115/75-C.E. The appellant contended that they had reversed the credit on inputs used for manufacturing the by-products, negating the need for the 8% deposit. The Tribunal acknowledged the reversal of credit and agreed with the appellant's argument, granting a waiver of the pre-deposit and staying its recovery until the appeal's disposal.

Issue 2: Applicability of previous judgments in similar cases
The appellant cited precedents where appeals were allowed in similar situations, such as the case of M/s. Ravindra Solvent Oils Private Ltd. and others. The Tribunal noted that judgments in cases like Rudra Bilas Kisan Sahakari Chini Mill Ltd. and Shakumbari Sugar & Allied Industries Ltd. had been affirmed by the Apex Court, supporting the appellant's position. Consequently, the Tribunal agreed with the appellant's submission, allowing the stay application and directing an expedited final hearing due to the substantial amount involved.

Issue 3: Interpretation of Larger Bench judgment on common inputs for excisable and exempted products
The JCDR relied on a Larger Bench judgment in Rallies India Ltd. v. CCL, Salem, concerning the use of common inputs for manufacturing excisable and exempted products. However, the Tribunal distinguished this judgment as the aspect of reversing 8% of the final product's value was not addressed. The Tribunal found that the Larger Bench decision did not consider the Supreme Court judgment in Shakumbari Sugar & Allied Industries Ltd., rendering it per incuriam and not applicable to the current case.

Issue 4: Consideration of Supreme Court judgments in related cases
The Tribunal emphasized the significance of Supreme Court judgments in cases like Rudra Bilas Kisan Sahakari Chini Mill Ltd. and Shakumbari Sugar & Allied Industries Ltd., which had upheld Tribunal decisions in favor of the appellants. Given the alignment of the current case with these precedents, the Tribunal agreed with the appellant's arguments and granted a waiver of the pre-deposit, ordering no recovery until the appeal's final disposal. The matter was scheduled for an expedited final hearing based on the substantial amount involved.

Overall, the Tribunal's decision favored the appellant, considering the established legal precedents and the specific circumstances of the case, leading to the waiver of the pre-deposit requirement and a stay on recovery pending the appeal's resolution.