2013 (10) TMI 1278 - AT - Service Tax

Cenvat credit - proof of receipt of capital goods - duty paying document - responsibility of manufacturer to ensure about the existence of the supplier-factory - Waiver of pre-deposit of duty u/s 11A of the Central Excise Act, 1944 r.w. Rule 14 of Cenvat Credit Rules, 2004 - Penalty u/s 11AC of Central Excise Act, 1944 Held that - Department did not submit anything to controvert the contention of the applicant that they availed cenvat credit on the basis of invoices issued by the manufacturer having Central Excise Registration, that they have paid the amount by Account Payee Cheques and the machines are in existence in the factory of the applicant The Tribunal in Sunvik Steels Ltd. Vs. Commr. of Central Excise, Bangalore 2011 (8) TMI 926 - CESTAT, BANGALORE allowed the appeal of the assessee in respect of goods supplied by the same supplier -the applicants are able to make out a prima-facie case for total waiver of pre-deposit - the requirement of pre-deposit of all dues waived and recovery stayed till the disposal Stay granted.

Summary

Issues: Application for waiver of predeposit of duty and penalty under Central Excise Act, 1944.

Analysis:
The applicant filed an application seeking waiver of predeposit of duty amounting to Rs.58,08,960 under Section 11A of the Central Excise Act, 1944 along with an equal penalty under Section 11AC of the same Act. The applicant's contention was based on the fact that they had availed Cenvat credit using invoices from a manufacturer with a valid Central Excise Registration Certificate. They emphasized that they had taken all necessary steps to verify the legitimacy of the supplier and had paid through Account Payee Cheques, which were duly encashed. The applicant argued that they had no reason to suspect any irregularities as they received the capital goods in their factory with proper Central Excise invoices. They further highlighted the absence of evidence indicating their knowledge of any discrepancies in the duty paying documents or any wrongdoing on the part of the supplier. The applicant also cited a previous Tribunal decision in support of their case, where a similar appeal was allowed for goods supplied by the same manufacturer.

The Department, represented by the ld. A.R., reiterated the findings of the ld. Commissioner (Appeals) without presenting any new evidence to counter the applicant's contentions. Upon examination, the Tribunal observed that the Department failed to provide any evidence contradicting the applicant's claims regarding the legitimate availing of Cenvat credit, payment through Account Payee Cheques, and the presence of machines in the applicant's factory as per the invoices. The Tribunal also referenced a previous case involving the same supplier where the appeal was allowed, further supporting the applicant's case. Consequently, the Tribunal found merit in the applicant's argument and granted a prima facie case for the total waiver of predeposit. As a result, the requirement for predeposit of all dues was waived, and the recovery of the same was stayed during the pendency of the appeal, thereby allowing the stay petition.

In conclusion, the Tribunal's decision favored the applicant, acknowledging their due diligence in verifying the supplier's credentials and the lack of evidence indicating any knowledge of irregularities. The Tribunal's ruling highlighted the importance of establishing a prima facie case for waiver of predeposit, which was successfully demonstrated by the applicant in this instance.