2012 (9) TMI 917 - AT - Central Excise

Waiver of pre deposit - Denial of exemption claim - Captive consumption - Whether or not the appellant is entitled to exemption from excise duty in respect of MS angles, MS channels, joist etc. manufactured by him and captively consumed in the factory of production - Held that - All capital goods and specified inputs manufactured and captively used within the factory of production are eligible to exemption from excise duty. In the instant case the benefit of notification has been denied to the appellant on the ground that MS angles, MS channels, joist etc. do not fall within definition of capital goods or components of capital goods or inputs; that aforesaid goods have been used for manufacture of coal, elevator, chamber separator, technological structure of gasifier which is a part of pre-heating furnace and since the goods in question have been used for manufacture of support structure those cannot even be termed as inputs eligible for the benefit under Notification. Adjudicating authority as also the Commissioner (Appeals) in our view is prima facie flawed for the reason that he has failed to appreciate that the coal elevator, chamber separator and coal gasifier are essential component of the production unit of the appellant. Undisputedly the goods in question have been used for purpose as such prima facie it appears that the goods have been used in relation to the manufacture of final product of the assessee. Therefore, the appellant is entitled to benefit of Exemption Notification No. 67/95-C.E. - Stay granted.

Summary

Issues:
- Whether the appellant is entitled to exemption from excise duty for goods used captively in the factory of production.
- Whether the appellant has a prima facie case justifying waiver of pre-deposit of duty demand, interest, and penalty.

Analysis:
1. The appellant, engaged in manufacturing iron and steel products, sought exemption under Notification No. 67/95-C.E. for goods used captively in their factory without payment of excise duty. The Department issued a show cause notice for duty demand, interest, and penalty, which was confirmed by the Assistant Commissioner and Commissioner (Appeals).

2. The appellant's advocate argued for waiver of pre-deposit, citing the Notification's applicability to goods used captively in the production of final products within the factory. The respondent opposed, contending that the goods in question did not qualify as capital goods or inputs under the Cenvat Credit Rules, 2004, referencing a Supreme Court judgment.

3. The Tribunal deliberated on whether the appellant was entitled to exemption under Notification No. 67/95-C.E. for goods like MS angles, channels, and joists used captively in production. The Notification exempts capital goods and specified inputs used within the factory of production.

4. The Tribunal found that the goods in question were essential components of the production unit and used in relation to the manufacture of the final product, thus entitling the appellant to the exemption. The previous adjudicating authorities' conclusions were deemed flawed for not recognizing the essential role of the goods in the production process.

5. The Tribunal dismissed the relevance of the judgment cited by the respondent, as it did not address the specific argument raised by the appellant regarding the classification of iron and steel structures. The Tribunal concluded that the appellant demonstrated a prima facie case for dispensing with the pre-deposit condition and stayed the recovery of duty demand, interest, and penalty until the appeal's disposal.

6. Ultimately, the Tribunal granted the appellant's request for waiver of pre-deposit and stayed the recovery process, allowing the appeal to proceed accordingly. The decision was pronounced on 3-9-2012.