2015 (3) TMI 1100 - AT - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - No goods have been manufactured and cleared during that time by using the inputs in respect of which the cenvat credit has been taken - Held that - Inputs in respect of which the cenvat credit of 1, 27, 95, 483/- had been taken had been received during the period from November 1997 to March 1999. As is clear from the chart in para14 of the impugned order during the period September 1999 to August 2000 a total of 1172 MT. of PTA was manufactured out of which 865.90 MTs of PTA was cleared on payment of duty. Subsequent to this there have been clearances of finished products till 2008 and in April 2008 there was stock of 34.37 MTS of PTA. From this it is prima facie evident that the inputs in respect of which the cenvat credit had been taken have been used for manufacture of finished products and just because some of the inputs in form of work in progress and some of the finished products are still lying in stock the cenvat credit cannot be denied as cenvat credit is admissible in respect of inputs used in or in relation to manufacture of some final products. The cenvat credit would be deniable only when the inputs are cleared as such which is not the department s case against the assessee. The impugned order therefore does not appear to be correct and the appellant have prima facie case in their favour. - Stay granted.

Summary

Issues:
1. Denial of cenvat credit on inputs used for manufacturing Purified Terepthelic Acid (PTA) due to plant closure.
2. Adjudication of cenvat credit demand, interest, and penalty by the Commissioner.
3. Appeal against the Commissioner's order confirming the cenvat credit demand.

Analysis:
1. The appellant set up a plant for manufacturing PTA in 1997, with manufacturing activities starting in September 1999. Cenvat credit of Rs. 1,27,95,483 was taken for various inputs from November 1997 to March 1999. Due to subpar product quantity, manufacturing ceased in August 2000, although finished products continued to be sold until April 2008. The department issued show cause notices for cenvat credit demand, which was partially dropped by the Commissioner in 2004. The Tribunal remanded the matter for re-adjudication, emphasizing the usage of inputs for PTA manufacturing. The Commissioner, in a subsequent order, confirmed the cenvat credit demand, interest, and imposed a penalty, leading to the current appeal.

2. During the hearing, the appellant's counsel argued that all inputs were utilized for manufacturing, with a significant quantity of PTA cleared on duty payment. The Commissioner's order acknowledged these facts but still upheld the cenvat credit demand. In response, the Departmental Representative supported the Commissioner's decision.

3. Upon review, the Tribunal found that a substantial amount of PTA was manufactured and cleared post-2000, indicating the input utilization for production. The presence of work-in-progress and finished goods in stock does not warrant cenvat credit denial, as long as inputs are used for manufacturing final products. Since the inputs were not cleared as such, the denial of cenvat credit appeared unjustified. Consequently, the Tribunal waived the pre-deposit requirement for the appeal and stayed the recovery of cenvat credit demand, interest, and penalty until the appeal's resolution. The stay application was granted in favor of the appellant.