2014 (1) TMI 112 - AT - Central Excise

Waiver of Pre-deposit of MODVAT credit on capital goods - Penalty under Rule 57U (6) r.w 173Q(bb) of erstwhile Central Excise Rules, 1944 Held that - In the Chartered Accountant Certificate it is clearly mentioned that the applicant had neither claimed depreciation under Section 32 of Income tax Act, 1961 nor as Revenue expenditure under any other provisions of the Income Tax Act, against the capital goods namely Ball Bearing, Laminator Dies, Timing Belt etc. - the Certificate even though placed before the adjudicating authority, the same has not been considered - Besides, the term Revenue expenditure has been substituted retrospectively by the Finance Act, 2003 Relying upon Honda Siel Cars (I) Ltd. vs. CCE-Noida 2003 (9) TMI 596 - CESTAT, NEW DELHI the assessee could able to make out a prima facie case for total waiver of dues Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
Application for waiver of pre-deposit of MODVAT Credit and penalty under Rule 57U(6) read with Rule 173Q(bb) of Central Excise Rules, 1944.

Analysis:
The applicant sought waiver of pre-deposit of MODVAT Credit and penalty amounting to Rs. 60,75,043 imposed under specific rules. The advocate for the applicant argued that the MODVAT Credit was availed on capital goods without claiming depreciation or as revenue expenditure, supported by a Certificate from a Chartered Accountant. The advocate highlighted the retrospective removal of the term 'Revenue expenditure' by the Finance Act, 2003, and cited a relevant judgment. The Revenue representative did not contest the retrospective amendment or the Certificate provided.

The Tribunal examined the records and the Chartered Accountant Certificate, noting the absence of depreciation or claiming as revenue expenditure against the capital goods during the specified period. The Tribunal acknowledged that the Certificate was not considered by the adjudicating authority and recognized the retrospective substitution of 'Revenue expenditure' by the Finance Act, 2003. Consequently, the Tribunal found a prima facie case for total waiver of the adjudged dues. As a result, the pre-deposit of dues was waived, and recovery stayed during the pendency of the Appeal, with the Stay Petition being allowed.

This judgment illustrates the importance of providing substantial evidence and legal arguments to support a request for waiver of dues. The retrospective changes in relevant provisions and the proper documentation from a Chartered Accountant played a crucial role in the Tribunal's decision to grant the waiver and stay the recovery process.