2013 (12) TMI 667 - AT - Central Excise

Eligibility for cenvat credit on Detergent cake Waiver of Pre-deposit - Revenue was of the view that the product manufactured was detergent powder and detergent cake could not be considered as input for manufacture of detergent powder Held that - Prima facie provisions of Section 2(f)(iii) and the fact that combined product is notified in the Third Schedule applicant should be eligible for Cenvat credit of duty paid on detergent cake Appellant had made out a prima facie case in their favour Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
1. Whether the applicant can take Cenvat credit of excise duty paid on detergent cake.

Analysis:
The case involved the applicant procuring detergent cake and detergent powder, packing them in the same pouch, putting an M.R.P. for the combined pack, and selling the pouches. The issue was whether the applicant could claim Cenvat credit on the excise duty paid on detergent cake. The Revenue contended that detergent cake could not be considered an "input" for detergent powder manufacture, leading to a Show Cause Notice denying Cenvat credit on detergent cake. The adjudication confirmed a demand for payment along with interest and penalties. The Commissioner (Appeal) upheld these decisions.

The counsel for the applicant relied on Section 2(f)(iii) of the Central Excises Act, 1944, stating that packing products notified under the Third Schedule would amount to "manufacture." Thus, packing detergent cake and powder in the same pouch should be considered "manufacture," making all materials in the pouch eligible as "inputs." On the other hand, the Revenue argued that only detergent powder was marketed, and detergent cake could not be an "input" for detergent powder manufacture. The Revenue cited various decisions to support their stance.

After considering both arguments, the Tribunal found that, prima facie, the applicant should be eligible for Cenvat credit on the duty paid for detergent cake. They highlighted Section 2(f)(iii) and the fact that the combined product was notified in the Third Schedule. The Tribunal noted that the decisions cited by the Revenue did not address the specific provisions in question. As a result, the Tribunal granted a waiver of pre-deposit for the dues from the impugned orders, allowing the appeals to proceed with a stay on the collection of dues during the appeal process.