2011 (3) TMI 363 - AT - Central Excise

Condition of pre-deposit - After hearing the learned DR, though we find favour with the DR s submission that the revised income tax return filed before the authorities do not stand adjudicated by them and as such, the benefit of the same cannot be extended at this point. We take note of the appellant s alternative plea of Revenue neutrality and find force in the same. Even according to the Commissioner, the modvat credit is not available to the assessee. The consequence of the same is that the appellant was not in a position to use the same for the discharge of duties on their final products and as such, final products were required to be cleared on payment of duty in cash. Such duty paid by the assessee located in Kutch district is liable to be refunded to him, in terms of the Notification No. 39/2001-CX. As such, the entire situation is Revenue neutral. By taking the same into consideration, we are of the view that appellants have a prima facie goods case in his favour. We accordingly, allow the stay petition unconditionally.

Issues:
1. Dispensing with the condition of pre-deposit of duty confirmed against the appellant along with the penalty.
2. Denial of modvat credit availed in respect of capital goods by the appellant.
3. Claim of depreciation before the Income Tax authorities.
4. Benefit of Notification No. 39/2001-CX for refund of duty paid in cash.
5. Prima facie case in favor of the appellant.

Analysis:

1. The appellant sought to dispense with the condition of pre-deposit of duty amounting to Rs. 75,55,267/- along with an equal penalty. The demand of duty was confirmed for the period 2007-08 due to the denial of modvat credit availed in respect of capital goods by the appellant. The appellant, engaged in manufacturing glass products, argued that taking 100% credit in the second year instead of 50% each in the first and second years did not prejudice the Revenue.

2. The appellant's representative contended that the denial of modvat credit did not impact the Revenue as the appellant was located in Kutch district and could claim a refund of the duty paid in cash under Notification No. 39/2001-CX. It was argued that since the modvat credit was not usable, the appellant would have paid the duty in cash, which would be refunded. The appellant asserted that the situation was revenue-neutral, and thus, requested the stay petition unconditionally.

3. The appellant also highlighted that they had revised their income tax return and submitted that if the revised return was not rejected by the income tax authorities, it should be deemed accepted. However, the authorities had not yet passed an order on the revised return. Despite this, the Tribunal acknowledged the appellant's argument regarding revenue neutrality due to the unavailability of modvat credit, leading to the duty being paid in cash and subsequently refunded under the notification.

4. The Tribunal considered the appellant's plea for unconditional stay, noting that the situation was indeed revenue-neutral. The Tribunal found merit in the appellant's claim that they had a prima facie good case in their favor. Consequently, the Tribunal allowed the stay petition unconditionally, emphasizing the revenue-neutral nature of the appellant's circumstances.

In conclusion, the Tribunal granted the appellant's request to dispense with the pre-deposit condition, recognizing the revenue-neutral aspect of the appellant's situation and finding a prima facie case in favor of the appellant.

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