2014 (3) TMI 243 - AT - Central Excise

Waiver of pre-deposit of Cenvat credit - the only ground on which the cenvat credit was denied to the applicant, was that initially, the goods were not duty paid and hence, when it was returned to the factory, after rejection, it cannot be admissible to cenvat credit under Rule 16 of the Central Excise Rules, 2002 - applicant had, after initial export of the goods, received back the rejected goods and paid CVD at the time of its re-import and availed CENVAT Credit of the CVD paid on the rejected goods, under Rule 16 - Held that - On a preliminary analysis of Rule 16 of the Central Excise Rules, 2002, prima facie, we are of the view that any goods on which duty has been paid at the time of removal when brought back to the factory for processes mentioned therein, would be eligible to cenvat credit. In these circumstances, we are of the opinion that the applicant is not able to make out a prima facie case for total waiver of the dues adjudged - Conditional stay granted.

Summary

Issues: Application for waiver of pre-deposit of Cenvat credit and penalty under Rule 15(2) of Central Excise Rules, 2004.

Analysis:
1. The applicant sought waiver of pre-deposit of Cenvat credit and penalty amounting to Rs. 68.45 lakhs imposed under Rule 15(2) of the Central Excise Rules, 2004 read with Section 11AC(1)(a) of the Central Excise Act. The dispute arose from availing Cenvat credit on goods re-imported after rejection by overseas buyers due to defects, where the goods were initially not duty paid. The applicant argued that the Cenvat credit was denied solely on the ground that the goods were not duty paid initially.

2. The Revenue, represented by the learned AR, contended that Rule 16 of the Central Excise Rules, 2002, clearly states the conditions for availing Cenvat credit, emphasizing that the applicant did not meet the eligibility criteria. The Rule allows for Cenvat credit on goods brought back to the factory for various processes if duty was paid at the time of removal. The Revenue supported the findings of the adjudicating authority, asserting that the applicant was not entitled to Cenvat credit under Rule 16.

3. After considering both arguments and examining the records, the Tribunal analyzed Rule 16 of the Central Excise Rules, 2002. The Tribunal noted that the Rule permits Cenvat credit on goods brought back to the factory for specified processes if duty was paid at the time of removal. The Tribunal observed that prima facie, the applicant did not establish a strong case for a complete waiver of the dues adjudged. To balance the interests of revenue and legal principles, the Tribunal directed the applicant to deposit 50% of the Cenvat credit involved. Upon compliance with this directive, the remaining dues would be waived, and recovery stayed during the appeal process, with a deadline for compliance set for a specific date.

This comprehensive analysis of the judgment delves into the core issues surrounding the waiver of pre-deposit of Cenvat credit and penalty under the Central Excise Rules, providing a detailed breakdown of the arguments presented by both parties and the Tribunal's decision based on the interpretation of relevant legal provisions.