2013 (12) TMI 672 - AT - Central Excise

Denial of credit on hollow profiles and panels Waiver of Pre-deposits Held that - The applicant took a definite stand that the items were used in the hollow profiles and panels which are integral part of the paint shop for effective performance of the machinery in the painting processes - There is a dispute as to use of these items in or in relation to the manufacture of final product - there is no verification of the use of the items - Relying upon Saraswati Sugar Mills Vs Commissioner of Central Excise, Delhi-III 2011 (8) TMI 4 - SUPREME COURT OF INDIA - iron and steel structure in Sugar Mills is not eligible for CENVAT credit - the applicant failed to make out a prima facie case for waiver of entire amount of pre-deposit of duty, penalty and interest - the applicant directed to deposit a sum of Rupees Twenty Five Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues Involved:
Waiver of pre-deposit of duty under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A(1) of Central Excise Act, 1944, interest under Rule 14 read with Section 11AB, and penalty under Rule 15 and Section 11AC.

Analysis:

1. Waiver of Pre-Deposit of Duty:
The applicant, engaged in manufacturing Motor Cars, sought waiver of duty of Rs.94,27,658 imposed under Rule 14 of CENVAT Credit Rules, 2004. The dispute arose from the denial of CENVAT credit on 'hollow profiles' and 'panels' used in the paint shop assembly. The applicant argued these items were integral for effective machinery performance in the painting process, citing relevant case laws. However, the Revenue contended that as the paint shop was immovable property, CENVAT credit was not applicable, supported by judicial precedents. The Tribunal noted the lack of verification of item usage and conflicting Supreme Court decisions. Consequently, the Tribunal directed the applicant to deposit Rs.25 lakhs within six weeks, with the balance dues waived pending appeal.

2. Interpretation of Eligibility for CENVAT Credit:
The Tribunal assessed the conflicting interpretations regarding the eligibility of iron and steel items for CENVAT credit. While the Supreme Court in the Rajasthan Spinning & Weaving Mills case allowed credit for steel used in an integral part of machinery, the Saraswati Sugar Mills case held structural iron and steel ineligible. The Tribunal emphasized the need for a prima facie case for waiver, highlighting the lack of clarity on the use of items in the manufacturing process. The decision to direct partial deposit reflected the Tribunal's consideration of the facts and circumstances, balancing the applicant's claims with legal precedents.

3. Miscellaneous Application for Early Hearing:
Given the stake involved being less than Rs.1 crore, the Tribunal dismissed the applicant's miscellaneous application for early hearing of the appeal. This decision aligned with procedural requirements based on the monetary threshold, indicating a standard approach to case management based on financial considerations.

In conclusion, the judgment by the Appellate Tribunal CESTAT Chennai addressed the complex issues surrounding the waiver of pre-deposit of duty, highlighting the importance of establishing a prima facie case and considering legal precedents in determining eligibility for CENVAT credit. The decision provided a nuanced analysis of the conflicting interpretations, ultimately directing a partial deposit while granting a waiver on the remaining dues during the appeal process.