2013 (4) TMI 503 - AT - Central Excise

Waiver of pre-deposit under Rule 6(3) of Cenvat Credit Rules, 2001 - Interest and penalty under Rule 5 - Demand under Rule 6(3) along with interest and penalty - Held that - Even if the department s plea that iron ore fines is an excisable goods fully exempted from duty and, hence, covered by the definition of exempted goods as given in Cenvat Credit Rules and on this basis the provisions of Rule 6(3) would be applicable is accepted, in view of the retrospective amendment of the provisions of Rule 6(3) by Section 73 of proportionate credit for which a formula is prescribed in this sub-rule as the appellant have used common input services, GTA services and clearing & forwarding agent s services in receipt of iron ore lumps in respect of which Cenvat Credit has been availed and which have been used in the manufacture of dutiable as well as exempted final product. According to the ld. Counsel for the appellant, total Cenvat Credit in respect of common services is around Rs. 3 lakhs and the amount to be reversed cannot be more than Rs. 3 Lakhs. In view of this, the applicant are directed to deposit an amount of Rs. 3 lakhs within a period of four weeks from date of this order - Compliance to be reported on 23.04.12 - On deposit of the above amount within the stipulated period, the requirement of pre-deposit of balance amount demanded under Rule 6(3), interest on this amount and penalty, shall stands waived and recovery thereof stayed till the disposal of the appeal.

Summary

Issues: Application for waiver from pre-deposit under Rule 6(3) of Cenvat Credit Rules, 2001.

In this case, the appellant, engaged in manufacturing sponge iron, applied for waiver from the pre-deposit requirement of Rs. 52,65,993/- confirmed against them under Rule 6(3) of Cenvat Credit Rules, 2001. The dispute arose from the appellant availing Cenvat Credit for common services of GTA and clearing & forwarding agent services used in the receipt of iron ore lumps, which were crushed to generate iron ore fines sold by the appellant. The main contention was whether the provisions of Rule 6(3) were applicable, as the appellant argued that no manufacturing was involved in converting iron ore lumps to fines, and iron ore fines were not exempted goods. The appellant also challenged the invocation of the extended period under proviso to Section 11A(C) of Central Excise Act, 1944, claiming the demand was time-barred. The department contended that iron ore fines fell under exempted goods, citing a specific chapter in the Central Excise Tariff and an exemption notification. The department also justified the longer limitation period based on the appellant's ER-1 returns not mentioning the clearance of iron ore fines. The Tribunal, after considering both arguments, directed the appellant to deposit Rs. 3 lakhs within four weeks, based on a retrospective amendment to Rule 6(3) allowing for a proportionate credit reversal. Upon compliance, the pre-deposit requirement for the remaining amount, interest, and penalty was waived, with recovery stayed pending the appeal's disposal.