2013 (2) TMI 413 - AT - Central Excise

Cenvat Credit - Payment of duty on exempted goods - Waiver of Pre-deposit - Job worker - Applicant is a merchant exporter - Imported raw material was supplied to M/s Maharashtra Seamless Ltd. - under rule 4(5) of the CENVAT Credit Rules, 2004 - Applicant has no facility to manufacture the goods, therefore, the credit in respect of the raw material is not available to the applicant - Notification 53/2003-Cus. - Held that - Following the decision in case of Ajinkya Enterprises (2012 (7) TMI 141 - BOMBAY HIGH COURT) that once the duty on final product has been accepted by the Revenue, in such a case the credit cannot be denied. As the applicant had paid more duty than the credit now being denied, pre-deposit of the dues is waived. Stay Granted

Summary

Issues:
- Waiver of pre-deposit of duty
- Denial of credit for inputs
- Applicant's status as a merchant exporter
- Import of raw material under CENVAT Credit Rules
- Contention of the Revenue regarding facility to manufacture goods

Analysis:
The judgment pertains to an application for the waiver of pre-deposit of duty amounting to Rs.2,78,77,385. The demand was confirmed due to the denial of credit for inputs on the basis that the applicant lacked the facility to manufacture excisable goods, leading to the alleged wrongful availment of credit. The applicant claimed to be a merchant exporter who supplied imported raw materials to another company under specific rules. The goods were manufactured by the other company, and duty was paid by the applicant using both credit and funds from PLA. The applicant argued that the demand was unsustainable as they had followed the necessary procedures under Notification 53/2003-Cus. The Revenue contended that the applicant did not have the manufacturing facility, making the credit for raw materials unavailable and justifying the demand.

The Tribunal noted that the applicant had paid duty exceeding the credit being denied. Citing a precedent from the Hon'ble Bombay High Court, the Tribunal emphasized that once the duty on the final product is accepted by the Revenue, the credit cannot be denied. Given that the applicant had paid more duty than the credit in question, the Tribunal decided to waive the pre-deposit of dues and stayed the recovery during the appeal process. Consequently, the stay petition was allowed, providing relief to the applicant.