2014 (3) TMI 553 - AT - Central Excise

Waiver of pre deposit - Recovery of CENVAT Credit - Reversal of credit on removal of inputs for job work for setting up factory within same premises - availing cenvat credit on inputs used for manufacture of goods for others, further used captive in manufacture of finished goods from others - Held that - It appears to be a case of interpretation of nitty-gritty of the rules involved, which can be examined during the hearing of the appeal. At the prima facie stage and on account of the issues involved, I waive the pre-deposit of the entire amount of dues and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Whether the applicant should have reversed the CENVAT credit on ammonia?
2. Can CENVAT credit be taken against invoices for tools not cleared out of the factory?

Analysis:
1. The applicant, a manufacturer of oil pumps, had an agreement with another company to manufacture nitrogen within their factory premises. The Revenue contended that the applicant should have reversed the CENVAT credit on ammonia when the goods were removed from the factory, which was not done. A show-cause notice was issued for recovery of the CENVAT credit. The applicant relied on previous decisions to support their case.

2. The second issue involved the applicant making tools for another company, which were not cleared out of their factory but used for manufacturing goods for that company. The Revenue argued that CENVAT credit cannot be taken against invoices for tools not cleared out. The applicant cited other cases in their defense.

3. The Revenue argued that the company manufacturing nitrogen was not acting as a job worker under specific notifications or procedures, hence the CENVAT credit should have been reversed when the inputs were removed from the factory. On the issue of tools, the Revenue maintained that since the invoices were in the name of the other company, CENVAT credit was eligible.

4. After considering both sides' submissions, the judgment highlighted the need for a detailed examination of the rules involved during the appeal hearing due to the complexity of the issues. As a result, the pre-deposit of the dues was waived, and the recovery was stayed during the appeal process. The decision was made to allow further examination of the nitty-gritty of the rules in question.