2013 (7) TMI 716 - AT - Central Excise

Waiver of Pre-deposit - CENVAT Credit of duty paid inputs on such goods under capital goods as the items which get fabricated/manufactured in the factory premises are used in the factory premises for manufacture of final product i.e. float glass Held that - Limitation point - Most of the credit has been taken by the appellant prior to 01.07.2009, when the definition of inputs undergone the change, indicates that CENVAT Credit on cement, TMT bars and structural sheets is not allowed. The credit taken by the appellant on 01.04.2010 is in respect of the items which were procured by the appellant prior to 01.07.2009. While taking the CENVAT Credit of these items during the relevant period, the appellant could have, prima facie, entertained a bonafide belief that there were various decisions holding that CENVAT Credit of Central Excise duty paid on supporting structures which are fabricated in the factory premises are eligible for CENVAT Credit - Appellant has made out a prima facie case for waiver of pre-deposit of the amounts involved only on the ground of limitation stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty on ineligible CENVAT Credit availed.

Analysis:
The appellant filed a Stay Petition seeking waiver of pre-deposit of duty amounting to Rs.1,82,64,636/-, along with interest and penalty, which were confirmed by the adjudicating authority as ineligible CENVAT Credit on various goods. The counsel for the appellant argued that the issue revolved around the utilization of inputs for construction purposes and that the appellant believed in good faith that they were eligible for the CENVAT Credit. The counsel highlighted that the decision of the Larger Bench in the case of Vandana Global Ltd was crucial and needed consideration. The appellant also emphasized the limitation aspect, stating that the objection was raised by the Audit party in October 2010, while the Show Cause Notice was issued in July 2011.

The Departmental Representative contended that the appellant should have disclosed the availment of credit if it was done in good faith, especially considering the retrospective nature of the amendment to the definition of inputs. The Department argued against complete waiver, asserting that the appellant failed to make a compelling case for it. The Tribunal examined the submissions from both sides and reviewed the records.

Upon review, the Tribunal acknowledged the contentious nature of the issue, particularly in light of the conflicting decisions by the Larger Bench of the Tribunal. The Tribunal noted that while the judgment in the case of Vandana Global Ltd was challenged in the High Court of Chattisgarh, the outcome was pending. Regarding the limitation point, the Tribunal observed that most of the credit was taken by the appellant before the change in the definition of inputs, indicating that CENVAT Credit on certain items was disallowed. The Tribunal recognized that the appellant might have genuinely believed in the eligibility of the credit based on previous decisions allowing similar credits for supporting structures fabricated in the factory premises.

Ultimately, the Tribunal found that the appellant had established a prima facie case for waiver of pre-deposit solely on the grounds of limitation. Consequently, the Tribunal allowed the application for waiver of pre-deposit of the remaining amounts and stayed the recovery until the appeal's final disposal.