2012 (10) TMI 267 - AT - Central Excise

Waiver of pre-deposit - Denial of cenvat credit wrongfully availed on the exempted inputs - iron ore concentrate is exempted fully from payment of duty in terms of Notification No. 4/06-C.E. Held that - Duty was paid by the assessee s supplier despite exemption Notification - supplier was unaware of such notification or it may be that some condition of the notification was not complied with but nevertheless the fact remains that duty was paid by the assessee s suppliers - assessee s supplier in fact paid the duty on raw materials supplied to assessee and the department accepted this excise duty. The concept of modvat is that if the raw material suffered duty then relief should be given so far as excise duty on the final product is concerned - raw material supplier has already paid duty with the Government Exchequer. Therefore the department shall not suffer irreparable loss - 100% waiver of demand of duty interest and penalties allowed

Summary

Issues:
Waiver of pre-deposit of duty and penalty on exempted inputs procured by the appellants.

Analysis:
The applicants, M/s. Tata Metaliks Ltd., sought waiver of pre-deposit of Rs. 14,75,60,088/- and an equal amount of penalty confirmed against them for the period February, 2008 to December, 2008. They procured iron ore concentrate from M/s. Tata Steel, which was exempted from duty. However, a show-cause notice was issued for wrongfully availing cenvat credit on these exempted inputs, leading to demands being confirmed and penalties imposed. The appellants argued that they were entitled to cenvat credit as they received duty paid invoices from the supplier, relying on Rule 9 of the Cenvat Credit Rules, 2004. They also cited a previous decision by the Tribunal granting unconditional waiver for an earlier period in their case. The Revenue contended that since the iron ore concentrate was exempted from duty, the appellants were not entitled to take credit for the duty paid by the supplier.

The Tribunal considered both sides' submissions and noted that the raw material supplier had indeed paid the duty, which was accepted by the Department. Citing a decision of the Hon'ble High Court of Madras, the Tribunal emphasized that if the raw material supplier had paid duty, relief should be granted on the excise duty of the final product. The Tribunal also highlighted that in the appellants' previous case on the same issue, the Tribunal had granted unconditional waiver of pre-deposit. Therefore, the Tribunal found that the appellants had made a prima facie case in their favor, with the balance of convenience favoring them as well. The Tribunal concluded that asking the appellants to make any pre-deposit would result in irreparable loss to them, as they were not liable for the amount. Additionally, since the raw material supplier had already paid duty, granting the stay would not cause irreparable loss to the Department. The Tribunal allowed the stay petition, granting 100% waiver of the demand of duty, interest, and penalties confirmed against the appellants, and stayed the recovery during the appeal's pendency.