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2012 (5) TMI 172 - AT - Central ExciseDemand - Revenue neutral exercise - Whether the pre-deposit is to be waived on the basis of revenue neutrality assessed by Member (Judicial) or pre-deposit should be called for considering that express provisions of notification as in force after 01-04-08 has been violated as assessed by Member (Technical) - Difference of opinion - matter referred to third member.
Issues Involved:
1. Availment and utilization of Modvat credit. 2. Refund of duty paid through PLA. 3. Revenue neutrality. 4. Invocation of extended period of limitation. 5. Compliance with Notification No. 56/2002-CE dated 14.11.2002. 6. Requirement of pre-deposit. Issue-wise Detailed Analysis: 1. Availment and Utilization of Modvat Credit: The appellant, engaged in manufacturing P & P Medicaments in Jammu, received furnace oil from April 2005 to March 2009 but did not avail credit on the duty paid, amounting to Rs. 45,72,156/-. The credit was later availed on 14.8.09 and utilized for payment of duty on final products. The proceedings initiated against the appellant proposed the denial of this credit as it was availed after three and a half years, which was challenged on the grounds that the Cenvat credit Rules do not limit the time horizon for availment of credit. The Commissioner accepted the appellant's stand, dropping the demand on this point. 2. Refund of Duty Paid Through PLA: The appellant paid duty amounting to Rs. 41,71,424/- in cash through PLA, which was subsequently refunded. The proceedings proposed the recovery of this refund, alleging that the appellant should have utilized the credit of Rs. 45,72,156/- during the period April 2005 to March 2009. The Commissioner confirmed the demand for the recovery of the refund by invoking the longer period of limitation and imposed a penalty of an identical amount. 3. Revenue Neutrality: The appellant contended that the entire exercise was revenue neutral as the duty paid from PLA during the period April 2005 to March 2009 would have been less if the credit was availed and utilized during the material period. The Tribunal referenced the decision in CCE, Jammu vs. New India Wire & Cables-2008 (232) ELT 681 (Tri.-Del.), which observed that such situations are revenue neutral. However, the Technical Member disagreed, stating that the notification explicitly required the utilization of Cenvat credit first, and any deviation from this would not be considered revenue neutral. 4. Invocation of Extended Period of Limitation: The show cause notice was issued on 28.10.10, alleging that the appellant availed the credit after three and a half years. The appellant argued that the demand was time-barred as they had informed the Superintendent of Central Excise about the credit availed in August 2009. The Tribunal found that the notice was prima facie barred by limitation. 5. Compliance with Notification No. 56/2002-CE dated 14.11.2002: The notification provided exemption for goods manufactured in Jammu, subject to the condition that the manufacturer first utilizes the whole of the Cenvat credit available before paying the balance amount in cash. The Technical Member emphasized that the appellant's practice of not availing the credit during the material period and later utilizing it was contrary to the notification's provisions. The notification aimed to exempt duty only to the extent of value addition, and the appellant's actions negated the express provisions of the notification. 6. Requirement of Pre-deposit: The Judicial Member opined that the appellant had made a good case for the stay petition, considering the situation as revenue neutral. However, the Technical Member disagreed, stating that the appellant violated the express provisions of the notification, and thus, pre-deposit should be called for. The final order, based on the majority view, required the appellant to make a pre-deposit of the excess exemption availed from 1.4.08 onwards within eight weeks. Final Order: In view of the majority order, the pre-deposit of excess exemption availed from 1.4.08 onwards (to be quantified by the applicant) is required to be made within a period of 8 weeks from the date of pronouncement of the final order. The matter is to come up for ascertaining compliance on 4.12.12.
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