2014 (4) TMI 48 - AT - Central Excise

Waiver of predeposit of CENVAT credit - Denial of the credit - Held that - There is no dispute of the fact that the applicant received the materials under the cover of the invoice issued under the CENVAT Credit Rules. It is further not in dispute that the duty paid goods was used in the manufacture of the finished products. The allegation of violation of the rules, as submitted by the learned AR, would be looked into at the time of hearing the appeal. We also notice that the dealer was not made a party during the period of investigation. In view of that, we find that it is a proper case for waiver of predeposit of the dues arising from the impugned order and for staying its recovery during the disposal of the appeal - Stay granted.

Summary

Issues:
- Application for waiver of predeposit of CENVAT credit
- Dispute regarding issuance of invoice by the dealer
- Allegation of violation of CENVAT Credit Rules

Analysis:
1. Application for waiver of predeposit of CENVAT credit:
The applicant filed an application seeking waiver of predeposit of CENVAT credit amounting to Rs.90,91,180/- along with interest and penalty. The applicant, engaged in the manufacture of aluminium ingots, received aluminium scrap both domestically and through imports. A portion of the imported scrap was removed from the factory after payment equal to the credit availed. The applicant later purchased the scrap from a dealer, availing credit based on the dealer's invoice. The applicant argued that there was no dispute regarding the transaction of goods and that the scrap was forwarded under an invoice by the dealer as per Rule 9(1) of the CENVAT Credit Rules, 2004.

2. Dispute regarding issuance of invoice by the dealer:
The learned Additional Commissioner, representing the respondent, referred to Rule 2(ij) and Rule 9(2) concerning first stage dealers. It was contended that the dealer in question did not have the authority to issue the invoice as they had not received the goods from the manufacturer as required by law. Additionally, Rule 3(5) and Rule 9(1) of the CENVAT Credit Rules were cited to support the argument against the validity of the invoice issued by the dealer.

3. Allegation of violation of CENVAT Credit Rules:
Upon hearing both parties and reviewing the records, the Tribunal found no dispute regarding the receipt of materials under the CENVAT Credit Rules or the use of duty-paid goods in the manufacturing process. The allegation of rule violation raised by the respondent was deemed to be a matter to be addressed during the appeal hearing. Notably, it was observed that the dealer in question was not made a party during the investigation period. Consequently, the Tribunal considered it a suitable case to grant the waiver of predeposit for the dues from the impugned order and to stay the recovery pending the appeal's disposal.

This judgment by the Appellate Tribunal CESTAT CHENNAI, delivered by Shri P.K. Das, provides a detailed analysis of the issues raised in the application for waiver of predeposit of CENVAT credit, the dispute over the dealer's invoice issuance, and the allegation of violation of the CENVAT Credit Rules, offering a comprehensive legal assessment and decision on the matter.