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2013 (12) TMI 518 - AT - Central ExciseDenial of cenvat credit - Clearance of goods made by invalidated advance licenses Waiver of Pre-deposit Held that - Following Oleofine Organics (India) Pvt. Ltd. and others vs. C.C.E., Thane-I 2013 (7) TMI 157 - CESTAT MUMBAI - The suppliers have not availed the refund of terminal excise duty - apart from the fact that the issue involved stands covered by the Tribunal decision , the circular which has been relied upon by the adjudicating authority is also not applicable on the disputed issue - the appellants have made out prima facie case in its favour Pre-deposits waived till the disposal Stay granted.
Issues:
1. Denial of cenvat credit to a company along with imposition of penalties. 2. Validity of invalidated advance licenses and procurement of raw materials. 3. Dispute regarding duty payment by suppliers of raw materials. 4. Comparison with a Tribunal decision in a similar case. 5. Adjudicating authority's preference of policy circular over Tribunal's order. Issue 1: Denial of cenvat credit and penalties The judgment revolves around the denial of cenvat credit amounting to Rs.36,43,74,948 and the imposition of penalties on M/s Balkrishna Industries Ltd. The impugned order by the Commissioner formed the basis for the appeals, leading to the stay petitions being disposed of collectively. Issue 2: Validity of invalidated advance licenses M/s Balkrishna Industries Ltd., engaged in tire manufacturing, availed cenvat credit on duty paid inputs. They procured advance licenses for raw material imports without duty payment, which were later invalidated. Despite handing over these invalidated licenses to raw material suppliers, the suppliers opted to pay duty instead of following the prescribed duty-free procedure, resulting in the use of duty-paid raw materials in the final product. Issue 3: Dispute over duty payment by suppliers The Revenue contended that suppliers should have cleared raw materials without duty payment based on the invalidated licenses. However, the Tribunal referred to a previous case involving Oleofine Organics (India) Pvt. Ltd., where it was established that the suppliers' duty payments did not lead to a revenue loss, and the appellants were entitled to take credit for the duty paid. Issue 4: Comparison with Tribunal decision The Tribunal compared the present case with the Oleofine Organics case, emphasizing that the suppliers' duty payments did not conflict with Central Excise law provisions. The Tribunal's decision in Oleofine Organics was deemed relevant and applicable to the current dispute, highlighting the absence of revenue loss due to the duty payments made by suppliers. Issue 5: Adjudicating authority's preference of policy circular The adjudicating authority chose to prioritize a policy circular over the Tribunal's order, citing a recent DGFT policy circular. However, the Tribunal found that the policy circular did not address the specific issue of credit availing on duty-paid supplies, concluding that the appellants had a prima facie case in their favor. Consequently, the Tribunal allowed the stay petitions without the pre-deposit of duty and penalties, scheduling the appeals for final disposal on a specified date. This judgment elucidates the intricate legal nuances surrounding the denial of cenvat credit, the validity of invalidated advance licenses, the duty payment dispute by suppliers, the relevance of a previous Tribunal decision, and the adjudicating authority's preference for a policy circular over established Tribunal orders. The analysis provides a comprehensive understanding of the issues addressed in the judgment and the legal reasoning employed by the Tribunal to resolve the disputes effectively.
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