2013 (10) TMI 1141 - AT - Central Excise

Cenvat Credit - Rule 6 of CCR - Exemption under Notification 7/2003-CE availed for basic duty whereas additional duty was paid Waiver of Pre-deposit - Held that - The applicants have cleared resins coated jute fabrics during the period from April, 2003 to July, 2004 by availing exemption under Notification 7/2003-CE for basic excise duty, but did not avail the exemption for additional excise duty - There is only one product manufactured and cleared which attract two types of duty, i.e. Basic Excise duty and Additional Excise duty - Prima-facie the applicant has paid additional excise duty at the time of its clearance as claimed, the product i.e. resins coated jute fabrics cannot be itself treated as wholly exempted product - the applicants are able to make out a prima-facie case for total waiver of pre-deposit - the dues waived and its recovery stayed during pendency of the appeal Stay granted.

Summary

Issues:
1. Waiver of predeposit of cenvat credit.
2. Availing exemption under Notification 7/2003-CE.
3. Contravention of Rule 6 (2) and Rule 6 (3)(a)(vi) of Cenvat Credit Rules, 2004.
4. Maintaining separate account inventory of inputs.
5. Payment of additional excise duty.

Analysis:

1. The appellant applied for waiver of predeposit of cenvat credit amounting to Rs.4,71,328. The appellant contended that they had paid additional excise duty on resin coated jute fabrics during a specific period, despite being exempted from basic excise duty as per Notification No.7/2003-CE. The Department issued a demand notice alleging that cenvat credit was wrongly availed on inputs, leading to a requirement to pay 8% of the goods' price. The appellant argued that since they paid duty at clearance, it did not qualify as nil rate of duty clearance, thus exempting them from the 8% payment. Additionally, they highlighted the dire state of the jute industry, emphasizing the undue hardship predeposit would cause.

2. The Department, represented by the ld. A.R., supported the findings of the ld. Commissioner (Appeals) by asserting that although the appellant paid additional excise duty, they did not pay basic excise duty. Consequently, the cenvat credit availed for manufacturing resin coated jute fabrics was deemed incorrect, necessitating an 8% payment under Rule 6 (3)(b) of Cenvat Credit Rules, 2004.

3. Upon hearing both parties and reviewing the records, the Tribunal found that the appellant cleared resin coated jute fabrics under exemption for basic excise duty but not for additional excise duty during the specified period. Allegations of contravention of Rule 6 (2) and Rule 6 (3)(a)(vi) of Cenvat Credit Rules, 2004 arose due to the lack of separate account inventory for dutiable and exempted final products. However, since the product attracted both basic and additional excise duty, and the appellant paid the additional duty at clearance, the Tribunal held that the product could not be considered wholly exempted at that stage. Consequently, the Tribunal granted a total waiver of the predeposit, staying the adjudged dues' recovery during the appeal's pendency. The stay petition was allowed, providing relief to the appellant.