2013 (11) TMI 1411 - AT - Central Excise

Denial of cenvat credit - Irregular and illicit credit availed on Rails as capital goods and as inputs - Waiver of Pre-deposit Held that - The Applicant had availed the CENVAT Credit on Rails as capital goods and as inputs - the procurement of Rails had been capitalized by the Applicant in their Statement of Accounts and Balance Sheet - the Applicant have not made out a prima facie case for total waiver of pre-deposit of the CENVAT Credit Assessee directed to deposit Rupees nine lakh as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
- Application for waiver of predeposit of duty and penalty
- Denial of CENVAT Credit on Rails as capital goods and inputs

Analysis:
The Applicant, engaged in manufacturing iron and steel products, filed an Application seeking waiver of predeposit of duty amounting to Rs.38,65,508/- and an equal penalty imposed under various rules. The Department had denied the Applicant CENVAT Credit of Rs.2,07,090/- on Rails as capital goods and Rs.36,058,415 on Rails as inputs. The Applicant argued that Rails are integral to their manufacturing process, facilitating the movement of raw materials and finished products within their integrated steel plant. They claimed the CENVAT Credit on Rails for the movement of overhead cranes as accessories. However, the Revenue contended that the Rails were capitalized by the Applicant and reflected in their accounts as capital goods, thus ineligible for CENVAT Credit under the relevant classification.

The Tribunal observed that the Applicant had indeed availed CENVAT Credit on Rails both as capital goods and inputs. The Rails had been capitalized in the Applicant's financial statements. As the Applicant failed to establish a prima facie case for a total waiver of predeposit, they were directed to make a predeposit of Rs.9,00,000/- within eight weeks. Upon compliance, the remaining dues would be waived, and recovery stayed during the pendency of the Appeal. The Stay Petition was disposed of accordingly.

In conclusion, the Tribunal upheld the requirement for the Applicant to make a partial predeposit, considering the nature of the Rails as reflected in the Applicant's financial records. The decision balanced the interests of the Applicant and the Revenue, providing a temporary relief pending the final adjudication of the Appeal.