2013 (11) TMI 1198 - AT - Central Excise

Shortage of Inputs - Credit availed on written-off materials - Waiver of Pre-deposit Held that - The inputs were not used in or in or in relation to manufacture of the excisable goods, but they were written-off, prima facie, the credit to the extent of the said inputs not used in or in relation to manufacture of excisable goods, does not appear to be admissible - the Advocate had raised the issue of limitation and certain discrepancy in the Order on the ground of value of the written-off materials taken by the Department, the fact of which can be examined at the time of deciding the Appeal - the Applicant are directed to deposit 25% of the duty as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Issues: Application seeking waiver of pre-deposit of duty, store-shortage adjustment, utilization certificate, limitation, admissibility of credit for written-off materials, discrepancy in value calculation, deposit requirement, stay on recovery during appeal.

Waiver of Pre-deposit of Duty:
The Application sought waiver of pre-deposit of duty amounting to Rs.2,36,409/- along with interest and penalty. The Applicant had adjusted store-shortage of inputs valued at Rs.3,79,395/- and Rs.10,98,162/- for the years 2002-03 and 2003-04, respectively, under the head of "Inventory Adjustment." The Department raised a demand for the credit availed on these written-off materials as the inputs were neither utilized for manufacturing nor accompanied by a Utilization Certificate.

Utilization Certificate and Limitation:
The Applicant's Advocate argued that the store-shortage was not determined through physical stock-taking but based on materials written off in the balance sheet for the relevant periods. He contended that a miscalculation led to an incorrect value of the written-off materials, suggesting a reduction in the duty amount. The Advocate also highlighted a previous favorable Order-in-Original and raised the issue of limitation.

Admissibility of Credit for Written-off Materials:
The Revenue's representative stated that as per relevant circulars, the CENVAT Credit of duty for written-off materials should be reversed if not utilized for manufacturing excisable goods. The Applicant failed to reverse the amount or provide a Utilization Certificate proving the materials' use in manufacturing. The discrepancy in the value of written-off materials was attributed to the Department's reliance on the balance sheet.

Decision and Deposit Requirement:
After hearing both parties and examining the records, the Tribunal found that the credit for inputs not utilized in manufacturing does not seem admissible. The Tribunal acknowledged the limitation issue and the discrepancy in the value calculation, which could be addressed during the Appeal. The Applicant was directed to deposit 25% of the duty within 8 weeks, with the balance dues waived and recovery stayed during the Appeal process. Compliance was required to be reported by a specified date.

This judgment addressed the waiver of pre-deposit of duty, the admissibility of credit for written-off materials, the requirement of a Utilization Certificate, the issue of limitation, and the discrepancy in the value calculation. The Tribunal's decision balanced the interests of both parties by setting a deposit requirement while waiving the balance dues and staying the recovery during the pendency of the Appeal.

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