2013 (10) TMI 1190 - AT - Central Excise

Waiver of pre-deposit of CENVAT Credit and Penalty under Rule 15 of the CC Rules r.w. Section 11AC of the CE Act - Held that - The Applicant has claimed the CENVAT Credit on the three items namely, PSC Railway Sleeper, Rails and Electrical items treating them as capital goods - the definition of capital goods in Rule 2(a) of the CENVAT Credit Rules,2004 has to be applied as the period involved i.e; from January, 2009 to April, 2009 and not the provisions of Rule 57Q of the erstwhile Central Excise Rules, 1944 - the Applicant could not able to make out a prima facie case for total waiver of the pre-deposit of the dues - the Applicant is directed to make a pre-deposit of 25% of the CENVAT Credit - the balance dues would stand waived and its recovery stayed during pendency of the Appeal Partial stay granted.

Summary

Issues: Application for waiver of predeposit of CENVAT Credit and penalty imposed under CENVAT Credit Rules, 2004

Analysis:
The judgment involves an application seeking waiver of predeposit of CENVAT Credit of Rs.70.50 lakh and an equal amount of penalty imposed under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The Applicant had availed CENVAT Credit on three items - PSC Railway Sleeper, Rail, and Electrical items, initially claiming them as capital goods used in their factory premises for manufacturing finished goods. The Applicant later presented an alternative argument considering these items as inputs used in the factory. The Advocate for the Applicant referred to judgments of the Hon'ble Rajasthan High Court and Hon'ble Karnataka High Court to support their contentions regarding the classification of these items.

The Advocate for the Applicant argued that the judgments cited by them were relevant to the definition of capital goods under the erstwhile Central Excise Rules, 1944, but the Revenue's argument was based on the changed definition of capital goods under the CENVAT Credit Rules, 2002/2004. The Revenue contended that the judgments cited were not strictly applicable to the present case due to the change in the definition of capital goods. The Commissioner's findings were also referred to by the Revenue to distinguish the said judgments. The Tribunal, after hearing both sides and examining the records, concluded that the Applicant could not establish a prima facie case for a total waiver of the predeposit of the dues adjudged. The Tribunal agreed with the Revenue that the definition of capital goods under the CENVAT Credit Rules, 2004 needed to be applied for the period involved in the case, which was from January 2009 to April 2009. Therefore, the Tribunal directed the Applicant to make a predeposit of 25% of the CENVAT Credit within eight weeks and report compliance by a specified date. Failure to comply would result in the dismissal of the Appeal without further notice to the Applicant.