2012 (6) TMI 336 - AT - Central Excise

Denial of the credit in respect of CVD - credit is availed on the strength of challans and not on bills of entry - application for waiver of pre-deposit of duty, interest and penalty - Held that - As the facts that the customs duty as well as CVD has been paid which was duly accepted by the customs authorities and thereafter goods were cleared, which were further used in the manufacture of final product and cleared on payment of duty are not in dispute,the pre-deposit of duty, interest and penalty is waived - in favour of assessee.

Summary

Issues:
Waiver of pre-deposit of duty, denial of credit in respect of CVD, validity of credit availed on the strength of challans, interpretation of CENVAT Credit Rules.

Analysis:
The applicant filed an application seeking waiver of pre-deposit of duty, interest, and penalty amounting to Rs.22,91,820/- after the demand was confirmed due to the denial of credit in respect of Countervailing Duty (CVD). The denial was based on the argument that the credit was availed using challans instead of bills of entry. The applicant contended that the goods were imported and warehoused, and upon attempting to file Ex-bond bills after the warehouse period expired, the Revenue directed payment of appropriate duty as the warehoused period had lapsed. Customs duty and CVD were paid and accepted by the authorities, following which the goods were cleared for use in manufacturing the final product. Citing a decision of the Hon'ble Punjab & Haryana High Court, the applicant argued that credit can be taken based on challans.

The Revenue, on the other hand, maintained that as per the CENVAT Credit Rules, the duty paying document for imported goods is the bill of entry, which the applicant failed to produce to claim credit, justifying the denial of credit. However, it was established that the applicant indeed paid the appropriate duty, which was accepted by the customs authorities, and the imported goods were released for use in manufacturing the final product, which was subsequently cleared after payment of duty. These facts were undisputed. Consequently, the Tribunal found in favor of the applicant, waiving the pre-deposit of duty, interest, and penalty, and staying the recovery of the same during the appeal process. The stay petition was allowed, providing relief to the applicant pending the appeal proceedings.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai, highlighted the importance of compliance with duty payment regulations while also considering the practical aspects of the situation, ultimately granting relief to the applicant based on the specific circumstances and the established facts of the case.