2013 (12) TMI 1029 - AT - Central Excise

Availment of CENVAT Credit - Duty paid on the common inputs - Inputs dutiable as well as exempted products - Waiver of pre-deposit Held that - Prior to 01.03.2008, the reversal of CENVAT Credit of duty attributable to the inputs consumed in the manufacturing of exempted products, was an accepted proposition by retrospective amendment - As regards post 01.03.2008, the appellant-assessee was required to follow the procedure as given in the provisions of Rule 6(3A) of the CENVAT Credit Rules, 2004, which mandates that assessee files the details of consumption of the common inputs in the manufacturing of the exempted products and reversing the amount of CENVAT Credit attributable to them mentions. All the legal arguments raised as to the practice followed by the assessee prior to 01.03.2008 will be applicable post 01.03.2008 also, can be considered only at the time of final disposal of appeal - as the appellants, have not followed the provisions of Rule 6(3A) of CENVAT Credit Rules, 2004, thus, needs to be put to some condition - the appellant directed to deposit Rupees Seven lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
- Availment of CENVAT Credit on common inputs used for exempted goods
- Compliance with Rule 6(3A) of the CENVAT Credit Rules, 2004
- Waiver of pre-deposit and stay of recovery pending appeal

Analysis:
1. The primary issue in this case pertains to the availment of CENVAT Credit on common inputs used for manufacturing exempted goods. The appellant sought a waiver of pre-deposit of an amount confirmed by the adjudicating authority, which was either 8% or 10% of the value of the exempted goods cleared from the factory. The appellant had reversed a substantial amount of CENVAT Credit but failed to comply with Rule 6(3A) of the CENVAT Credit Rules, 2004, post 01.03.2008, which required filing details of consumption of common inputs for exempted products and reversing the corresponding CENVAT Credit.

2. The Tribunal noted that prior to 01.03.2008, the reversal of CENVAT Credit for inputs used in exempted products was accepted. However, post 01.03.2008, the appellant was obligated to follow Rule 6(3A) regarding the reversal of CENVAT Credit for such inputs. The appellant's failure to adhere to this rule necessitated imposing conditions before considering the waiver of pre-deposit. The legal arguments regarding practices pre-01.03.2008 were deemed applicable only at the final disposal of the appeal.

3. Considering the negligible impact of the CENVAT Credit availed on the inputs, the Tribunal directed the appellant to deposit Rs. 7 lakhs within eight weeks and report compliance. Upon compliance verification, the Tribunal would decide on the waiver of pre-deposit for the remaining amounts involved. Recovery of the balance amounts was stayed pending the appeal's disposal, subject to the reported compliance with the deposit directive.

This judgment emphasizes the importance of complying with the CENVAT Credit Rules, specifically Rule 6(3A), for availing credit on common inputs used for exempted goods. It highlights the Tribunal's approach to balancing the interests of the appellant and the revenue authorities by imposing necessary conditions while considering waiver requests and ensuring compliance with legal provisions.