2011 (3) TMI 1304 - AT - Central Excise

Application for stay - recovery calculated @10% of the price of exempted goods payable at the time of clearance - benefit of provision under Rule 6(6)(vii)(a) of the Cenvat Credit Rules, 2004 or Sl. No. 91 in the Table appended to Notification No. 6/2006-C.E.- Held that - The benefit under both the provisions is to the supplier, who has succeeded in getting the contract of supply of goods by having participated in the International Competitive Bidding - Appellants are merely supplying the goods to another firm, who is successful in obtaining the project work by taking part in the International Competitive Bidding in relation thereto - appellants cannot claim benefit either under the project comprised under Rule 6(6)(vii)(a) of the said Rule or under notification in question - appellants have to satisfy the requirements of rules under the Cenvat Credit as specified under the impugned order, more particularly sub-rule (3)(b) of Rule 6 of the Cenvat Credit Rules, 2004 - no prima facie case having been made out for total waiver of the amount demanded under the impugned order - Decided against the assessee

Summary

Issues:
Application for stay of recovery order passed by Commissioner, Allahabad regarding payment of duty on exempted goods under Cenvat Credit Rules, 2004.

Analysis:
1. Facts of the Case: The appellants were engaged in manufacturing steel structures and availing Cenvat credit facility. They supplied goods to ABB Ltd. for a project with Delhi Metro Rail Corporation Ltd., partly on payment of duty and partly without payment under exemption notification.

2. Contentions of Appellants: The appellants argued that the goods supplied were for an international competitive bidding project and should be exempt under Rule 6(6)(vii)(a) of Cenvat Credit Rules and Notification No. 6/2006-C.E. They contended that the authorities erred in their classification under the exemption notification.

3. Respondent's Argument: The DR argued that the Commissioner correctly analyzed the case and denied the benefit claimed by the appellants. He stated that there was no basis for waiving the demanded amount.

4. Observations and Analysis: The Commissioner found that the goods supplied were not against international competitive bidding as per certificates provided by ABB Ltd. and Delhi Metro Rail Corporation Ltd. The provisions under Rule 6(6)(vii)(a) and Notification No. 6/2006-C.E. apply to goods supplied "against" international competitive bidding, which the appellants did not meet.

5. Decision: The Tribunal held that the appellants failed to qualify for the exemption and directed them to deposit a sum of Rs. 27 Lakhs within 8 weeks, waiving the balance amount till the appeal's disposal. The Tribunal noted that the observations were prima facie views and no case for total waiver was established.

6. Extended Period and Suppression of Facts: The Tribunal clarified that the period involved did not warrant an extended period or suppression of facts as the show cause notice was issued within a reasonable timeframe from the period in question.

In conclusion, the Tribunal denied the appellants' stay application, emphasizing that the benefit of exemption under Cenvat Credit Rules and relevant notifications applied only to goods supplied directly against international competitive bidding, which the appellants failed to demonstrate. The decision highlighted the importance of meeting specific criteria for exemption eligibility and directed partial deposit of the demanded amount pending appeal resolution.