2013 (2) TMI 335 - AT - Central Excise

Non compliance of making predeposit - CENVAT credit in question had been taken on structural materials which were partly used in the construction of civil foundation for a Kiln and partly used to fabricate structural support to capital goods - Held that - The appellant request for modification of the direction for pre-deposit was also considered by the appellate authority which rejected their plea of undue hardships for want of documentary evidence. The appellate authority appears to have, by and large, followed the principles of natural justice also. Nevertheless, for the ends of justice, one more opportunity to the appellant to make the requisite pre-deposit - appeal allowed by way of remand with a direction pre-deposit 50% of the disputed CENVAT credit within six weeks from the date of receipt of a certified copy of this order and report compliance.

Summary

Issues:
Denial of CENVAT credit, demand of interest, imposition of penalty, non-compliance with Section 35F of Central Excise Act, definition of capital goods under CENVAT Credit Rules, 2004, principles of natural justice.

Analysis:
The appeal in this case challenges the denial of CENVAT credit of Rs. 78,040, demand of interest, and imposition of a penalty of the same amount. The appellant, through a written request received via FAX, sought a decision on merits without a personal hearing. The original authority had ordered the recovery of the disputed amount along with interest and imposed a penalty. The party appealed to the Commissioner (Appeals) and requested a waiver of pre-deposit, but failed to comply with the directive to deposit 50% of the amount under Section 35F of the Central Excise Act within the prescribed time, leading to the dismissal of the appeal for non-compliance.

Upon review, it was found that the CENVAT credit was taken on structural materials used partly in the construction of civil foundation for a Kiln and partly for fabricating structural support to capital goods. The materials did not qualify as capital goods as per Rule 2(a) of the CENVAT Credit Rules, 2004. The appellate authority's decision to ask for a pre-deposit was deemed reasonable, and the appellant's request for modification was rejected due to lack of documentary evidence supporting their claim of undue hardship. The appellate authority was noted to have generally followed the principles of natural justice. However, in the interest of justice, the appellant was granted another opportunity to make the required pre-deposit.

As a result, the impugned order was set aside, and the appeal was allowed by way of remand with a directive for the appellant to pre-deposit 50% of the disputed CENVAT credit within six weeks. Compliance was to be reported to the Commissioner (Appeals) for further proceedings in accordance with the law and principles of natural justice.