2013 (11) TMI 1193 - AT - Central Excise

Cenvat credit on Common Input Services - Waiver of pre-deposit of amount confirmed as 5% of the value of exempted goods, interest and penalty Bar of Limitation - Held that - The issue involved in this case is not free from doubt and needs deeper consideration for more than one reason - The process which has been explained to the lower authorities as well as the Bench does not indicate that Ammonium Sulphate is arising as a byproduct or otherwise. As regards the limitation aspect, the appellant has made out a case on limitation - At the same time, a show cause notice which was issued in April 2011, demanding 5% of the value of the exempted goods from January 2009 to February 2011 covers at least a period which is in limitation period - the issue involved is not free from doubt and is debatable one, keeping in mind that the appellant has raised a point on limitation, in order to hear and dispose appeal, the appellant should be put some condition, though having reversed an amount of Rs.28,000 - the appellant directed to deposit further an amount of Rupees One lakh and fifty thousand as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
Waiver of pre-deposit of amount confirmed as 5% of the value of exempted goods, interest, and penalty due to CENVAT Credit availed on common input services for manufacturing both dutiable and exempted products. Interpretation of whether Ammonium Sulphate is a byproduct or final product. Invocation of extended period for audit reports lacking evidence of CENVAT Credit availed on common input services.

Analysis:
The appellant filed a Stay Petition seeking waiver of pre-deposit due to availing CENVAT Credit on common input services for manufacturing dutiable and exempted products, including Potassium Cyanide and Sodium Cyanide, with Ammonium Sulphate arising as a byproduct. The appellant argued that CENVAT Credit for dutiable products cannot be considered for byproducts, citing relevant judgments. The Departmental Representative contended that Ammonium Sulphate is not a byproduct and invoked the extended period due to unclear audit reports on CENVAT Credit availed. The Tribunal noted the complexity of the issue as the manufacturing process did not clearly establish the status of Ammonium Sulphate.

The Tribunal observed that the process of manufacturing indicated a reaction involving further raw materials for Ammonium Sulphate, requiring detailed examination to determine its status as a byproduct or final product. Regarding the limitation aspect, the Tribunal acknowledged the appellant's argument but noted the show cause notice issued within the limitation period. Given the debatable nature of the issue and the appellant's reversal of a portion of the CENVAT Credit, the Tribunal directed the appellant to deposit an additional amount within a specified period for further consideration.

Consequently, the Tribunal ordered the appellant to deposit a specified amount and report compliance within a set timeframe. Upon compliance, the application for waiver of pre-deposit for the remaining amounts was allowed, and recovery stayed pending the appeal's disposal. The decision highlighted the need for a detailed examination of the manufacturing process to determine the status of Ammonium Sulphate and the invocation of the extended period based on the clarity of audit reports.