2013 (12) TMI 1082 - AT - Central Excise

Denial of Cenvat credit - Goods Inputs and/or Capital goods under Rule 2 (k) and Rule 2 (a) of the Cenvat Credit Rules, 2004 Waiver of Pre-deposit Held that - The Applicant had availed the CENVAT Credit on Rails initially claiming it as capital goods and later as inputs - The applicant had contended that initially they claimed the rails as capital goods and accordingly, capitalized the same in the Books of Accounts, but for the subsequent periods, the rails were claimed as inputs under Rule 2 (k) of Cenvat Credit Rules, 2004 - Following M/s. SAIL, DURGAPUR STEEL PLANT Versus COMMISSIONER OF CENTRAL EXCISE, BOLPUR 2013 (11) TMI 1411 - CESTAT KOLKATA - the applicant directed to deposit 25% of the cenvat credit as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
1. Application for waiver of pre-deposit of cenvat credit and penalty.
2. Denial of credit on Rails as inputs or capital goods.
3. Interpretation of Cenvat Credit Rules, 2004 regarding availing credit on Rails.
4. Capitalization of Rails in the Applicant's accounts.
5. Direction to deposit 25% of cenvat credit amount.

Analysis:
1. The judgment deals with an application for waiver of pre-deposit of cenvat credit of Rs.1.51 Crores and an equal amount of penalty imposed under Rule 15(2) of the Central Excise Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

2. The Applicant, engaged in manufacturing iron and steel products, was denied credit of Rs.1,51,63,176/- on Rails by the Department, alleging that Rails did not qualify as inputs or capital goods under Rule 2(k) and Rule 2(a) of the Cenvat Credit Rules, 2004.

3. The Applicant argued that Rails were integral to their manufacturing process in an integrated steel plant, facilitating the movement of raw materials and finished products within the plant. They claimed that the CENVAT Credit on Rails was used for the movement of overhead cranes and treated as accessories to such cranes.

4. The Revenue contended that the Rails were initially capitalized by the Applicant and reflected in their accounts as capital goods, making them ineligible for cenvat credit as they were classified under a specific sub-heading in the Central Excise Tariff Act, 1985.

5. The Tribunal found that the Applicant initially claimed the Rails as capital goods but later as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004. Considering previous decisions, the Tribunal directed the Applicant to deposit 25% of the cenvat credit amount within eight weeks, with the balance amount waived upon compliance. Failure to deposit would result in the dismissal of the appeal without further notice.