2010 (5) TMI 478 - AT - Central Excise

Waiver of pre-deposit cenvat credit Inputs suppliers working under area based exemption Notification No. 32/99-C.E. Excess duty paid by suppliers on freight and insurance charges by including them in assessable value and refund of whole duty including excess duty received in terms of notification - if credit of excess duty paid is allowed, the exchequer would suffer a loss by refunding equal amount to the suppliers and giving credit of the same amount to the appellants - appellants do not have a case in their favour for full waiver of pre-deposit - The appellants have also not disclosed the fact that they have taken credit of duty paid on freight and insurance charges as recorded by the lower appellate authority and hence their claim for non application of extended period of time, prima facie not sustainable - Directed to deposit 50%.

Issues:
1. Duty credit variation based on suppliers' duty liability.
2. Applicability of Area Based Exemption Notification No. 32/99-C.E.
3. Consideration of excess duty paid by suppliers on freight and insurance charges.
4. Prima facie view on waiver of predeposit for the appellants.
5. Disclosure of duty credit on freight and insurance charges by the appellants.
6. Direction for pre-deposit of duty amount.

Analysis:
1. The case involves a dispute regarding duty credit variation for the appellants based on the suppliers' duty liability. The suppliers, operating under Area Based Exemption Notification No. 32/99-C.E., claimed refund of duty paid on inputs used by the appellants for manufacturing. The issue arises as the suppliers had paid excess duty on freight and insurance charges, which was not required to be paid as per a previous Tribunal decision. The appellants sought full waiver of predeposit, but the Tribunal held that allowing credit for excess duty would result in a loss to the exchequer beyond the benefit granted under the notification.

2. The Tribunal considered the applicability of Area Based Exemption Notification No. 32/99-C.E., which allows suppliers in specified areas to claim duty refunds promptly. Buyers, including the appellants, are permitted to take credit of duty paid by the suppliers. However, in this case, the suppliers had already received refunds, including the excess duty paid on freight and insurance charges. Allowing the appellants to claim credit for this excess amount would lead to a loss for the exchequer, contrary to the purpose of the notification.

3. The Tribunal addressed the issue of excess duty paid by suppliers on freight and insurance charges. Despite a previous Tribunal decision stating that such charges are not includible in the assessable value, the suppliers had paid excess duty on these components. As the suppliers had already received refunds, including the excess duty, the Tribunal concluded that the appellants cannot claim credit for this excess portion without causing a loss to the exchequer.

4. The Tribunal expressed a prima facie view that the appellants did not have a case for full waiver of predeposit. The appellants' failure to disclose that they had taken credit for duty paid on freight and insurance charges affected the sustainability of their claim for non-application of the extended period of time. Consequently, the Tribunal directed the appellants to pre-deposit 50% of the duty amount within a specified timeline.

5. The Tribunal highlighted the importance of the appellants' disclosure regarding duty credit on freight and insurance charges. The failure to disclose this information impacted the sustainability of their claim for non-application of the extended period of time. This lack of disclosure also influenced the Tribunal's decision regarding the waiver of predeposit for the appellants.

6. In conclusion, the Tribunal issued a direction for the appellants to pre-deposit 50% of the duty amount within a specific timeframe following the pronouncement of the order. This directive aimed to ensure compliance with the duty payment requirements and to address the issues raised regarding duty credit variation and excess duty paid by the suppliers.

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