2010 (8) TMI 311 - AT - Central Excise

Waiver of pre-deposit cenvat credit - materials on which credit was taken were used in the erection/fabrication of pollution control equipments and storage tanks - claimed that boilers, conveyor belts, chimneys etc. which were fabricated out of the materials are pollution control equipments - Held that - boiler used to generate steam for manufacture of final product is not a pollution control equipment, nor is a conveyor belt used to control pollution - chimney only drives out effluent gases cannot be said to be a pollution control equipment - appellant has not made out prima facie case for the Credit part pre-deposit allowed

Summary

Issues: Waiver of pre-deposit and stay of recovery regarding CENVAT credit and penalty disallowed by lower authorities.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for CENVAT credit and penalty disallowed by lower authorities. The appellant claimed the materials were used in the construction of pollution control equipments and storage tanks, which they argued qualified as 'capital goods.' The appellant relied on certificates of a Chartered Engineer to support their claim. However, the lower authorities disallowed the credit, stating the items were used in the erection/fabrication of machinery not qualifying as 'capital goods.' The appellant argued that the materials should be recognized as 'inputs' under the CENVAT Credit Rules, 2004. The respondent referred to a Tribunal decision and argued against the admissibility of the credit. The appellant cited a notification to support their claim that the credit availed before a certain date should be admissible.

2. The Tribunal found no prima facie case for the appellant against the entire demand. While the appellant claimed the materials were used in pollution control equipments and storage tanks, they failed to provide convincing evidence. The Tribunal noted that items like boilers, conveyor belts, and chimneys, fabricated from the materials, did not qualify as pollution control equipments based on the appellant's argument. The Tribunal found the appellant's argument lacking in substantiation and unconvincing.

3. The Tribunal acknowledged that the storage tanks were embedded in the earth and partly used for specific purposes. It recognized storage tanks as capital goods under the rules, suggesting that the steel items used in their construction could qualify as 'inputs.' The Tribunal considered the validity of a notification in relation to the entitlement of the appellant for the credit on steel items used in the construction of storage tanks. The Tribunal found the consultant's submission regarding the admissibility of credit on steel items for storage tanks to be valid.

4. The Tribunal estimated the total CENVAT credit on steel items used in the construction of storage tanks to be a specific amount. The appellant failed to establish a prima facie case for the remaining credit, citing a Tribunal decision against them. Additionally, the appellant did not provide evidence of financial hardships. Consequently, the Tribunal directed the appellant to pre-deposit a specified amount within a given period under the Central Excise Act, 1944.

5. The Tribunal set a date for compliance with the pre-deposit directive, emphasizing the need for the appellant to adhere to the specified requirements.