2014 (4) TMI 501 - AT - Central Excise

Availment of CENVAT Credit - Credit taken in respect of the goods received from a 100% EOU - Held that - appellant had been doing the calculation based upon the formula which has been mentioned in sub-rule (7) of Rule 3 of CENVAT Credit Rules, 2004 for the period June 2007 to February 2010. Revenue authorities are not convinced with the formula which has been put into use by the appellant and has held that the appellant has availed excess CENVAT Credit. On perusal of the the Notification No.23/2003-CE dt.31.3.2003 during the relevant period and also the provisions of Rule 3 of CENVAT Credit Rules, 2004, we find that the there is a formula prescribed under the said rule for availment of CENVAT Credit of the Excise duty paid by an 100% EOU under the provisions of Section 3 of Central Excise Act, 1944. The calculation given by the ld. Counsel as regards their submission that they have correctly availed CENVAT Credit, needs to be gone in detail after considering the provisions of CENVAT Credit Rules, 2004 read with said Notification No.23/2003-CE. In our considered view, the issue is contentious one and needs some time for disposal. In view of this, we find that the main appellant-assessee has not made out a prima facie case for complete waiver of pre-deposit of the amount of the duty demanded by the adjudicating authority - Conditional stay granted.

Summary

Issues involved:
1. Waiver of pre-deposit of duty confirmed by authorities due to excess CENVAT Credit availed from 100% EOU.
2. Confirmation of demand, interest, and penalties imposed on the assessee.
3. Interpretation of CENVAT Credit Rules, 2004 and Notification No.23/2003 for calculating CENVAT Credit.
4. Contentious issue of correct amount of CENVAT Credit available for goods received from 100% EOU.

Analysis:

1. The judgment dealt with the Stay petitions seeking waiver of pre-deposit of duty confirmed by authorities. The appellant had availed excess CENVAT Credit from a 100% EOU. The adjudicating authority confirmed a demand of Rs.82,06,787 along with interest and penalties on the assessee and the authorized signatory.

2. The counsel argued based on Rule 3 of CENVAT Credit Rules, 2004, and sub-rule (7) that the appellant correctly took CENVAT Credit of CVD part paid by the 100% EOU. The issue was contentious as per the authorities, questioning the formula used by the appellant for availing CENVAT Credit.

3. The main issue revolved around the correct calculation of CENVAT Credit available for goods received from a 100% EOU. The Tribunal examined the provisions of CENVAT Credit Rules, 2004, and Notification No.23/2003-CE to determine the eligibility of the appellant for the credit. The Tribunal found the issue to be contentious and required detailed consideration.

4. Considering the complexity of the issue and a similar case precedent, the Tribunal directed the appellant to deposit Rs.6 lakhs within eight weeks and report compliance. The applications for waiver of pre-deposit of the remaining amounts were allowed, and recovery stayed pending the appeal's disposal.

This judgment highlighted the importance of correctly interpreting the CENVAT Credit Rules and relevant notifications for determining the eligibility of CENVAT Credit, especially in cases involving goods received from 100% EOU. The Tribunal's decision emphasized the need for detailed examination of such contentious issues before granting complete waiver of pre-deposit.