2012 (11) TMI 482 - AT - Central Excise

Waiver of pre-deposit of Duty, Interest and Penalty - held that - Goods manufactured by the job worker on which appropriate duty has been paid was further used by the job worker in the manufacture of the goods which were returned to the applicant on payment of appropriate duty. Credit cannot be demanded simply on the ground that the goods manufactured by job worker are not received in the factory of the applicant - Pre-deposit of the same is stayed during the pendency of the appeal - stay petition is allowed.

Summary

Issues:
- Waiver of pre-deposit of duty, interest, and penalty
- Denial of credit in respect of goods manufactured by job worker
- Interpretation of CENVAT Credit Rules, 2004

Analysis:
The judgment addresses the issue of waiver of pre-deposit of duty, interest, and penalty. The applicant sought waiver of pre-deposit amounting to Rs.3,88,76,622/- due to a demand confirmed by denying credit for goods manufactured by a job worker. The Revenue contended that the applicant availed credit for goods not received in their factory. However, the Tribunal found that the goods manufactured by the job worker, for which appropriate duty was paid, were further used in manufacturing goods returned to the applicant after payment of appropriate duty. The Tribunal held that the applicant had a strong case, as the credit cannot be demanded solely based on goods not physically received in the factory. Consequently, the pre-deposit was stayed during the appeal, with the stay petition being allowed.

The judgment also delves into the issue of denial of credit in respect of goods manufactured by a job worker. The Revenue's argument was based on the applicant placing an order for certain goods, with the job worker paying duty on those goods. The goods manufactured by the job worker were then used in producing other goods cleared under specific rules. The Revenue alleged that the applicant availed credit for goods not physically received in their factory. However, the Tribunal found that the applicant had a valid case, given that the goods manufactured by the job worker were used in producing goods returned to the applicant after payment of appropriate duty. This aspect led the Tribunal to stay the pre-deposit during the appeal process.

Furthermore, the judgment involves the interpretation of the CENVAT Credit Rules, 2004. The Tribunal's analysis focused on the application of these rules concerning the credit availed by the applicant for goods manufactured by a job worker. The Tribunal emphasized that the mere fact of goods not being physically received in the factory does not warrant the demand for credit. Instead, the Tribunal highlighted the chain of manufacturing and usage of goods, ultimately leading to the conclusion that the applicant had a strong case warranting the stay of pre-deposit during the appeal proceedings.