2010 (7) TMI 595 - AT - Central Excise

Waiver of pre-deposit - Cenvat credit - The appellants are procuring dies block on payment of duty for manufacture of dies which is partly used for manufacture of exempted goods supplied to Defence Establishment and partly used for manufacture of aluminium road wheel which is also cleared to Defence Establishment on payment of duty - Availed exemption in respect of dies under Notification No. 67/95-C.E The impugned dies have been used in the manufacture of both exempted goods and dutiable goods and the ld. advocate has also produced invoices showing clearance of dutiable items to Defence Establishment produced with the impugned dies - The appellants have made out a prima facie case for waiver of duty demand as the credit taken on inputs used in the manufacture of capital goods cannot be denied if such capital goods are used for manufacture of both exempted and dutiable finished goods - Hence,waive the pre-deposit.

Summary

Issues:
1. Reversal of credit taken on dies block used for manufacturing both exempted and dutiable goods.

Analysis:
The case involved a dispute regarding the reversal of credit taken on dies block used for manufacturing both exempted and dutiable goods. The appellants procured dies block on payment of duty for manufacturing dies partly used for exempted goods supplied to Defence Establishment and partly used for manufacturing aluminium road wheel cleared to Defence Establishment on payment of duty. The department sought reversal of the credit taken on dies block as the dies were exempted from duty. The appellants argued that when capital goods are used for producing both exempted and dutiable goods, there is no requirement to reverse the credit taken on inputs used for manufacturing such capital goods.

The Tribunal heard arguments from both sides. The appellants contended that they had used the impugned dies for manufacturing both exempted and dutiable goods, supported by invoices showing clearance of dutiable items to Defence Establishment produced with the impugned dies. The department argued that the appellants had not earlier claimed that the dies were partly used for producing dutiable goods, and the payment of 10% of the value of exempted finished goods did not support their case regarding the reversal of credit taken on dies block.

After considering the submissions, the Tribunal found that the question of exempting the dies under Notification No. 67/95-C.E. was not in dispute. The key issue was whether the credit taken on dies block should be reversed. The Tribunal noted that the appellants had made a prima facie case for waiver of duty demand as they had shown that the impugned dies were used in the manufacture of both exempted and dutiable goods. Therefore, the Tribunal waived the requirement of pre-deposit pending the appeal's disposal, ruling in favor of the appellants.