2010 (8) TMI 317 - AT - Central Excise

Waiver of pre-deposit cenvat credit on duty paid by job worker - Notification No. 214/86 as an exemption notification is basically shifting the time of payment and permitting the principal manufacturer to pay the duty instead of the job worker - duties on goods procured by the applicants as well as the duty paid by the job worker on the processed components have gone to the Government account - finding of double benefit not sustainable - pre-deposit of duty interest and penalty waived

Summary

Issues:
1. Availment of CENVAT credit on duty paid by job worker without reversing credit.
2. Interpretation of Notification No. 214/86 regarding duty payment.
3. Decision on pre-deposit of duty, interest, and penalty pending appeal.

Analysis:
1. The case involved the applicant, a manufacturer of motor vehicle components, who procured plastic components as inputs and did not reverse the CENVAT credit when they removed the components to a job worker. The job worker paid duty, which the department argued was not required. The duty paid by the job worker was then taken as credit by the applicant. The original authority and Commissioner (Appeals) held that the applicant wrongly availed the credit. However, the Tribunal found that the duties on the plastic components procured by the applicant and the duty paid by the job worker have both gone to the Government account, indicating no double benefit was obtained by the applicant.

2. The Tribunal analyzed Notification No. 214/86, dated 24-3-1986, which is an exemption notification shifting the time of duty payment and allowing the principal manufacturer to pay the duty instead of the job worker. The Tribunal noted that the duty paid by the job worker was taken as CENVAT credit by the applicant. Based on this interpretation, the Tribunal did not find the allegation of double benefit sustainable. Therefore, the Tribunal decided to waive the pre-deposit of duty, interest, and penalty and stayed the recovery pending the appeal's disposal.

3. In conclusion, the Tribunal allowed the stay petition, emphasizing that the duty, interest, and penalty need not be pre-deposited by the applicant until the appeal is finalized. The Tribunal's decision was based on the interpretation of the duty payment process under Notification No. 214/86 and the absence of double benefit accruing to the applicant. The judgment provided clarity on the availment of CENVAT credit and the implications of duty payment by the job worker in such scenarios, ensuring a fair and just outcome for the parties involved.