2013 (11) TMI 1150 - AT - Central Excise

Denial of CENVAT credit Waiver of Pre-deposit Revenue contended that the steel items and welding electrodes were used by the appellant predominantly for a period after the scope of the definition of input was restricted, by an amendment of the 2nd Explanation to Rule 2(k) after the amendment, structural steel items, cement, etc. used in the construction of shed are not to be considered as inputs Held that - In the absence of evidence of payment (equivalent to the amount of CENVAT credit taken on steel items/welding electrodes used in the construction of shed), the appellant should pre-deposit this amount as they have no prima facie case against the denial of CENVAT credit thus appellant directed to submit amount as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought against denial of CENVAT credit on various materials.
2. Applicability of the definition of 'input' under Rule 2(k) of the CENVAT Credit Rules, 2004.
3. Impact of the amendment to the 2nd Explanation to Rule 2(k) on the eligibility of certain materials as inputs.

Analysis:

1. The appellant filed an application seeking waiver of pre-deposit and stay of recovery concerning the denial of CENVAT credit amounting to Rs.2,60,249/- on materials like MS plates, angles, channels, beams, rounds, sheets, and welding electrodes for a specific period. The appellant contended that a portion of the materials was used in constructing a shed, and the corresponding CENVAT credit amount was paid but not recognized by the adjudicating authority. The appellant's counsel expressed inability to produce relevant challans initially but requested an opportunity to do so. Additionally, the appellant argued that the remaining CENVAT credit related to welding electrodes used for capital goods repairs and steel items for capital goods part replacements, qualifying as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004.

2. The Superintendent (AR) opposed the appellant's claim, highlighting that the steel items and welding electrodes were predominantly used after the scope of the 'input' definition was restricted by an amendment to the 2nd Explanation of Rule 2(k). Post this amendment, materials like structural steel items and cement used in shed construction were excluded from the definition of inputs. Considering these submissions, the presiding officer found insufficient evidence of payment equivalent to Rs.1,90,542/- (the CENVAT credit on steel items/welding electrodes for shed construction) and directed the appellant to pre-deposit this amount within six weeks. The appellant was instructed to report compliance by a specified date, with a waiver and stay granted against the remaining dues and penalties upon due compliance.

3. The judgment underscores the importance of substantiating claims related to CENVAT credit utilization and the eligibility of materials as inputs under the prevailing legal framework. It also highlights the impact of legislative amendments on the interpretation of statutory provisions governing credit availment. The decision emphasizes the need for proper documentation and compliance with procedural requirements to support claims for waiver of pre-deposit and stay of recovery in tax matters, ensuring a fair and reasoned adjudication process.