2011 (11) TMI 553 - AT - Central Excise

Waiver of pre deposit - Utilization of common modvatable goods resulting in dutiable Sponge iron as also on dolochar - Clearance of dolchar without duty payment - Held that - inclusion of the dolochar under the tariff is subsequent to the decision to the above decision of the Tribunal in the same appellants case, but keeping in view the findings arrived at by the Tribunal that dolochar cannot be held to be a manufactured item, by following the earlier decision of the Supreme Court in the case of Ahmedabad Electricity Company Ltd. 2003 (10) TMI 47 - SUPREME COURT OF INDIA , we hold that the appellant has been able to make out a prima facie case in its favour as it is well settled that the entry of particular product in the tariff by itself would not satisfy the definition of manufacture as appearing in Section 2(f) of the Central Excise Act - Stay granted.

Summary

Issues:
1. Whether the condition of pre-deposit of duty and penalty should be dispensed with.
2. Whether dolochar should be treated as an exempted excisable product or not.
3. Whether dolochar can be considered a manufactured product for the purpose of Rule 6(3)(b) of Cenvat Credit Rules.

Analysis:

Issue 1:
The appellant sought to dispense with the pre-deposit of duty and penalty amounting to Rs. 20,91,119. The duty was confirmed against the appellant under Rule 6(3)(b) of Cenvat Credit Rules for utilizing common modvatable goods resulting in dutiable Sponge iron and dolochar without payment of duty from February 2004 to January 2009.

Issue 2:
The Revenue contended that dolochar, specified under entry No. 2621 90 00 of the Central Excise Tariff attracting nil rate of duty, should be treated as an exempted excisable product. However, the appellant argued that dolochar is a residue/refused and not a manufactured product, citing a previous Tribunal decision in their favor.

Issue 3:
The Tribunal considered the classification of dolochar under the tariff subsequent to the earlier Tribunal decision. Despite the inclusion in the tariff, the Tribunal held that dolochar cannot be considered a manufactured item based on the Supreme Court's precedent in Ahmedabad Electricity Company Ltd. The Tribunal concluded that the appellant had made a prima facie case in their favor, emphasizing that the mere entry in the tariff does not automatically qualify as 'manufacture' under Section 2(f) of the Central Excise Act. Consequently, the stay petition was unconditionally allowed.

This judgment revolves around the appellant's request to waive the pre-deposit condition of duty and penalty, the classification of dolochar as an exempted excisable product, and the determination of whether dolochar qualifies as a manufactured product under the Cenvat Credit Rules. The Tribunal's decision was influenced by the interpretation of dolochar's nature and the applicability of relevant legal provisions and precedents, ultimately leading to the unconditional allowance of the stay petition in favor of the appellant.