2013 (11) TMI 1112 - AT - Central Excise

Cenvat credit availed on construction of civil structure - Waiver of Pre-deposit of duty Held that - Some portion was used for the construction purpose and the applicant is not eligible to avail CENVAT credit - The use of the materials in the storage tank, boiler, chimney etc. would be examined at the time of appeal hearing they have already paid part of the amount - the applicant to deposit a further sum of Rupees twenty lakhs as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
- Application for waiver of pre-deposit of duty
- Eligibility of CENVAT credit on certain materials
- Examination of materials used in construction purposes
- Direction for deposit and waiver of balance dues

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved the consideration of an application for the waiver of pre-deposit of duty amounting to Rs.62,40,911/- along with interest and penalty. The applicant, engaged in the manufacture of sugar and chemicals, had availed CENVAT credit on specific materials falling under Chapter 72 and 73 of the CETA, 1985, which were used for setting up a new plant and related infrastructure. The contention arose regarding the actual usage of these materials, with the learned counsel arguing for their utilization in setting up various equipment and pollution control accessories, while the learned AR contended that they were primarily used for construction purposes. It was noted that the applicant had presented a Chartered Engineer's certificate disclosing partial usage for construction, which was not fully disclosed before the lower authorities.

Upon reviewing the Chartered Engineer's certificate, it was established that some portion of the materials was indeed used for construction purposes, rendering the applicant ineligible to avail CENVAT credit. The Tribunal decided to further examine the specific use of materials in storage tanks, boilers, chimneys, etc., during the appeal hearing. Considering the submissions from both sides, the Tribunal directed the applicant to deposit an additional sum of Rs.20,00,000/- within a specified timeline and report compliance by a set date. Upon this deposit, the pre-deposit of the remaining dues was waived, and the recovery thereof stayed during the appeal process.

In conclusion, the judgment highlighted the importance of accurately disclosing all relevant facts and usage of materials when claiming CENVAT credit. The decision to require a deposit and waive the balance dues was made based on the specific findings regarding the partial usage of materials for construction purposes, emphasizing the need for transparency and compliance with regulations in such matters.