2013 (12) TMI 1235 - AT - Central Excise

Entitlement for Exemption Notification No.6/2006 Compliance of procedure under Rule 6(3) (b) of the CENVAT Credit Rules, 2004 Gear box assembly and Gear motor assembly manufactured Waiver of Pre-deposit Held that - Rule 6(3)(b) Rule 6 of CENVAT Credit Rules, 2004 (as it stood upto 31.03.2008), if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to 10% of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory - by Notification No.10/2008-CE(NT), dated 01.03.2008 (effective from 01.04.2008), the manufacturer has an option to pay 10% of the value of the exempted goods or pay the amount equivalent to the CENVAT credit attributable to inputs/input services based on a formula under clause (b) of sub-rule 3(A) of Rule 6 of the said Rules - Rule 6 was amended retrospectively by the Finance Act, 2010 - the applicant had already reversed the credit of Rs.97,85,380 - the applicant is directed to deposit a further amount of Rupees Twenty Lakhs as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Demand of 10% of the value of total price of finished goods under Rule 6(3)(b) of CENVAT Credit Rules, 2004.
3. Interpretation of Rule 6(3)(b) before and after the amendment.
4. Compliance with the reversal of CENVAT credit and payment requirements.

Condonation of Delay:
The applicant filed for condonation of an 85-day delay in filing the appeal due to a writ petition before the High Court. The High Court's order extended the stay to enable the appeal remedy before the Tribunal. The delay was condoned based on the High Court's directions, allowing the appeal to proceed.

Demand of 10% of Finished Goods Value:
The applicant, engaged in manufacturing, availed CENVAT credit on imported materials for finished goods. The Revenue alleged non-compliance with Rule 6(3)(b) regarding payment of 10% of the value of finished goods cleared without duty under an exemption notification. The Commissioner confirmed the demand, leading to a recovery order and penalty.

Interpretation of Rule 6(3)(b):
The Tribunal noted the amendment to Rule 6(3)(b) post-April 2008, allowing options for payment based on a formula. The retrospective amendment by the Finance Act, 2010 provided an option for payment with evidence within a specified period. The Commissioner observed non-exercise of this option by the applicant, leading to non-compliance post-April 2010.

Compliance with Reversal of CENVAT Credit:
The applicant claimed to have reversed the proportionate CENVAT credit used for exempted goods, supported by a Chartered Accountant's Certificate. However, the Revenue representative argued lack of evidence for credit reversal as per the amended formula. The Tribunal found the applicant's submission inadequate, directing a further deposit of a specified amount pending compliance and disposal of the appeal.