2014 (1) TMI 158 - AT - Central Excise

Inputs not received Cenvat credit availed on the basis of invoices issued for raw materials suppliers Waiver of Pre-deposit Held that - Without the receipt of the inputs, it is not only difficult but in practical to manufacture their final product, which stands cleared on payment of duty - demand of around Rs. 3.15 crores stand confirmed in respect of the waste and rejects, which came into existence during the course of manufacture of their final product. The appellants have shown the receipt of the same in their records but as they have not shown issuance of the same for further manufacture, Revenue has believed that the dross ingots received by the appellant from job worker stands removed by them clandestinely without further activities of using the same in the manufacture of alloy ingots - The appellant had earlier approached the Hon ble High Court of Punjab & Haryana, which directed them to freeze an amount by 1.65 crores from their Cenvat account assessee submits that they are ready to deposit such amount - an amount of Rs. 5 lakhs stand already deposited by them, but in any case that the deposit is attributable to the shortage of the final product - the applicant is directed to deposit an amount of Rs.2 crores as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues Involved:
1. Confirmation of demand and penalty against the applicant.
2. Alleged irregularities in availing Cenvat credit.
3. Confirmed demand related to waste and rejects during manufacturing.
4. Demand raised concerning dross ingots entrusted for job works.
5. Confirmed demand regarding ash and residue during manufacturing.
6. High Court's direction to freeze an amount from Cenvat account and subsequent deposit requirements.

Analysis:

1. The judgment confirms the demand of Rs.19,08,78,007 against the applicant, along with an identical penalty. The applicant is engaged in manufacturing aluminum alloy ingots and casting, as well as zinc alloy ingots.

2. A demand of approximately Rs. 7 crores was confirmed due to alleged irregularities in availing Cenvat credit. The issue arose from discrepancies in truck numbers mentioned in supplier invoices and actual goods supplied, attributed to interstate problems leading to transhipment of inputs.

3. Another demand of around Rs. 3.15 crores was confirmed for waste and rejects during manufacturing. The Revenue alleged that rejected material was sold without duty payment, while the appellant claimed remelting and reuse with proper private records.

4. A part of the demand was raised concerning dross ingots entrusted for job works. The Revenue suspected clandestine removal without further manufacturing, contrary to the appellant's assertion of proper usage in alloy ingots production.

5. Additionally, a demand was confirmed for ash and residue arising during manufacturing. The appellant had previously approached the High Court, which directed freezing a specific amount from their Cenvat account.

6. In compliance with the High Court's order, the appellant was directed to deposit Rs. 2 crores as a condition for hearing their appeal, with a deadline set for compliance. Upon this deposit, the pre-deposit of the remaining duty and penalties would be waived, and recovery stayed during the appeal's pendency.

This comprehensive analysis covers the issues addressed in the judgment, highlighting the key findings and decisions made by the tribunal.