2013 (10) TMI 1191 - AT - Central Excise

Clandestine Removal of goods - Waiver of pre-deposit of CENVAT Credit and Penalty u/s 11AC of the CE Act r.w Rule 15(2) of the CC Rules - Revenue was of the view that the Applicant though received the CI Moulds and availed the CENVAT Credit, but instead of utilizing, cleared the same clandestinely in the guise of captive consumption Held that - Prima facie the Applicant were maintaining the Mould Register, wherein receipt/consumption of the CI Moulds were duly entered - after receipt of the CI Moulds, the same were utilized in the manufacture of finished goods namely, MS ingots and in the process of manufacture, the CI moulds were exhausted, and ultimately, the same were melted along with other raw materials for manufacture of the finished goods - Prima facie the finding of the ld. Commissioner that since the CI moulds were not available at the time of visit of the audit officers could not be accepted - Stay granted.

Summary

Issues: Application seeking waiver of predeposit of CENVAT Credit and penalty under Central Excise Act, 1944.

Analysis:
The Applicant, engaged in manufacturing MS ingots, sought waiver of predeposit of CENVAT Credit and penalty imposed under Section 11AC of the Central Excise Act, 1944. The Applicant utilized CI Moulds in the manufacturing process, treating them as capital goods. The Applicant argued that the CI Moulds, after use, were consumed in their factory by melting them along with other raw materials for the production of finished goods. They maintained a CI Moulds Register, verified periodically by the Range Superintendent, with no objections raised. The demand notice alleged clandestine removal of CI Moulds without payment of duty. The Applicant contended that all received and consumed moulds were duly recorded in the Register, but the Adjudicating Authority did not consider this, leading to the confirmation of the demand.

The Revenue argued that the entries in the CI Moulds Register could not be relied upon as the Applicant failed to produce evidence of the quantity of CI Moulds consumed/used and in stock during the audit officers' visit. After hearing both parties and examining the records, the Tribunal found that the demand was confirmed based on the belief that the Applicant, despite receiving CI Moulds and availing CENVAT Credit, cleared them clandestinely instead of using them in manufacturing. The Tribunal, however, noted that the Applicant maintained a Mould Register where the receipt and consumption of CI Moulds were properly recorded. The Tribunal was not convinced by the Commissioner's finding that the absence of CI Moulds during the audit indicated clandestine clearance, as the Applicant explained that the moulds were used in manufacturing MS ingots and melted with other raw materials. Consequently, the Tribunal found a prima facie case for total waiver of predeposit of the dues adjudged, granting the Applicant relief and staying the recovery of dues during the Appeal's pendency.