2013 (11) TMI 1291 - AT - Central Excise

Conditional Exemption under Notification No. 56/2002 Refund claim with regard to cenvat credit waiver of Pre-deposit - Held that - During February 2006 to April 2006 period, the appellant did not take Cenvat credit in respect of SAD resulting in higher quantum of exemption under Notification No. 56/2002-CE and thus higher quantum of refund, in December 2006 as soon as this was pointed out, they took the Cenvat credit of this amount, as a result of this in the month of December 2006 their refund claim was lesser to that extent - Prima facie, overall there was no excess availment of exemption under Notification No. 56/2002-CE, as the excess quantum of refund under Notification No. 56/2002-CE during February 2006 to April 2006, was neutralised by lesser quantum of refund under this notification during December 2006 - The appellant have a strong prima facie case in their favour - the requirement of pre-deposit of duty demand, interest and penalty waived till the disposal Stay granted.

Summary

Issues:
Claim of excess refund under Notification No. 56/2002-CE, applicability of proviso to Section 11A(1) for time-barred demand, invocation of extended period due to suppression of fact.

Analysis:
The appellant, a manufacturer of telephone cables in Jammu & Kashmir, availed duty exemption under Notification No. 56/2002-CE by utilizing Cenvat credit for duty payment on finished products. However, during February to March 2006, they did not utilize Cenvat credit for Special Additional Customs Duty (SAD), resulting in higher refund under the notification. Upon audit pointing out the issue in December 2006, the appellant rectified by taking the Cenvat credit of Rs. 10,72,419/- during that month, leading to a lesser refund. A show cause notice was issued in 2011 for allegedly claiming excess refund, invoking the extended period under Section 11A(1). The Additional Commissioner confirmed the duty demand and imposed penalties. The Commissioner (Appeals) upheld this decision, leading to the current appeal and stay application.

The appellant argued that there was no intention to claim excess refund, as the unutilized credit was rectified promptly in December 2006, resulting in a balanced refund situation. They contended that the demand was time-barred, and the proviso to Section 11A(1) was inapplicable. The appellant requested a waiver of pre-deposit for duty, interest, and penalty pending the appeal.

The Department opposed the stay application, citing suppression of facts and supporting the findings of the Commissioner (Appeals). However, the Tribunal found that the appellant rectified the credit issue promptly in December 2006, leading to a balanced refund situation overall. As there was no excess availment of exemption under Notification No. 56/2002-CE, the Tribunal considered the appellant to have a strong prima facie case. Consequently, the requirement of pre-deposit for duty demand, interest, and penalty was waived, and recovery stayed pending the appeal. The stay application was allowed, providing relief to the appellant.