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2015 (3) TMI 1087 - AT - Central ExciseWaiver of pre deposit - Area Based Exemption under Notification No. 56/02-CE - either any duty was being paid in respect of the tubular poles nor the exemption under the above-mentioned notification was availed. - Held that - Appellant did not pay the duty in respect of clearances of poles at the time of commencing commercial production in the year 2009 in view of the Apex court s judgment in the case of Hindustan Poles Corporation vs. CCE, Kolkata (2006 (3) TMI 2 - SUPREME COURT ) while they in view of the Apex court s judgment dated 28/3/08 in the case of Prachi Industries vs. CCE, Chandigarh (2008 (3) TMI 25 - Supreme court) were liable to pay duty on tubular poles. The show cause notice for demand of duty for the period from January 2012 to November 2012 has been issued on 05/2/13 and the duty demand is within the normal limitation period. We are of prima facie view that in view of the Apex court s judgment in the case of Prachi Industries vs. CCE, Chandigarh (supra), the appellant shall be liable to pay duty in respect of the clearances of tubular poles during the period of dispute. - this is not the case for total waiver. - Partial stay granted.
Issues:
1. Whether duty is payable on the clearances of tubular poles manufactured by the appellant during the period from January 2012 to November 2012? 2. Whether the appellant is eligible for Cenvat credit in respect of the inputs used in the manufacture of steel tubular poles? 3. Whether the penalty imposed on the appellant under Section 11AC is justified? Analysis: Issue 1: The appellant, a manufacturer of tubular poles and accessories, commenced commercial production in 2009. The appellant applied for Central Excise registration covering only accessories, not tubular poles, due to the judgment in Hindustan Poles Corporation vs. CCE, Kolkata. However, the Apex Court's subsequent judgment in Prachi Industries vs. CCE, Chandigarh held that joining pipes to make poles amounts to manufacture. The Department issued a show cause notice in 2013 for duty demand on tubular poles cleared from January 2012 to November 2012. The Commissioner confirmed duty demand of &8377; 1,11,74,209/-, allowing Cenvat credit for inputs and imposing a penalty of &8377; 6,64,546/-. The appellant argued ignorance of the law and requested waiver of pre-deposit. The Tribunal found the duty demand valid under the new legal position but allowed Cenvat credit, reducing the net duty liability to about &8377; 31,00,000/-. The appellant was directed to deposit &8377; 6,00,000/- within eight weeks, with the balance waived for appeal hearing. Issue 2: The Commissioner allowed Cenvat credit for inputs used in manufacturing steel tubular poles, which was quantified by the Range Officer. The appellant contended they would be eligible for Cenvat credit of about &8377; 80,83,283/-, reducing their net duty liability. The Tribunal upheld the Commissioner's decision on Cenvat credit, considering it in the net duty liability calculation. Issue 3: The Commissioner imposed a penalty of &8377; 6,64,546/- on the appellant under Section 11AC. The appellant argued against the penalty, citing their compliance with filing ER-1 returns and the subsequent show cause notice. The Tribunal did not specifically address the penalty issue in the judgment, as the focus was on the duty demand and Cenvat credit. Therefore, the penalty imposed remains upheld based on the Commissioner's order. In conclusion, the Tribunal upheld the duty demand on tubular poles, allowed Cenvat credit for inputs, and directed the appellant to deposit a specified amount while waiving the balance for appeal hearing. The penalty imposed by the Commissioner under Section 11AC was not specifically addressed in the Tribunal's judgment.
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