2014 (3) TMI 517 - AT - Central Excise

CENVAT credit - Credit denied in respect of structural materials (plates, channels and angles) which were claimed to have been used for repairs and maintenance of capital goods - Lower authorities, contended in the construction of factory shed/building/laying of foundation/making of structures for support of capital goods - Held that - Even any statement indicating the manner of use of the materials is not forthcoming. In the circumstances, the appellant cannot be considered to have made out prima facie case against the above denial of CENVAT credit. The appellant has pleaded limitation against the demand - there will be a direction to the appellant to pre-deposit the entire amount of CENVAT credit within 6 weeks - there will be waiver and stay in respect of the penalty imposed on them - Stay granted partly.

Summary

Issues: Denial of CENVAT credit for structural materials used in repairs and maintenance; Disclosure of CENVAT credit in periodical returns; Requirement of pre-deposit for waiver and stay of penalty

Denial of CENVAT credit for structural materials used in repairs and maintenance:
The judgment addresses the denial of CENVAT credit amounting to Rs. 3,65,516/- for structural materials like plates, channels, and angles claimed to have been used for repairs and maintenance of capital goods. The lower authorities found that these materials were actually used in the construction of a factory shed, building, laying of foundation, or making structures for supporting capital goods. The appellant failed to substantiate their claim that the materials were used as components/spares/accessories of capital goods. Lack of evidence regarding the manner of use of the materials led to the conclusion that the appellant did not establish a prima facie case against the denial of CENVAT credit.

Disclosure of CENVAT credit in periodical returns:
The appellant argued that the CENVAT credit in question was disclosed to the department through periodical returns and by furnishing the CENVAT Register along with the returns. However, the Deputy Commissioner (AR) contested this claim, stating that the manner of use of the materials was not disclosed through returns or any accompanying documents. The Deputy Commissioner's assertion that the materials' use was not adequately disclosed by the appellant was considered prima facie valid, reinforcing the need for proper documentation and disclosure to support CENVAT credit claims.

Requirement of pre-deposit for waiver and stay of penalty:
The judgment directed the appellant to pre-deposit the entire amount of CENVAT credit within six weeks and report compliance to the DR by a specified date. It was further stated that in the event of due compliance, there would be a waiver and stay of the penalty imposed on the appellant. This requirement for pre-deposit as a condition for obtaining waiver and stay of penalties underscores the procedural aspects involved in addressing CENVAT credit disputes and the importance of timely compliance with such directives to avail of relief from penalties.