2012 (8) TMI 819 - AT - Central Excise

Eligibilty for Cenvat credit - Import of plastic granules - Held that - On going through the records it is apparent that the appellant have availed Cenvat credit in respect of inputs which resulted in waste. Admittedly the excise duty in respect of the aforesaid waste has been paid. Therefore at this initial stage we are of the view that the appellants have been able to make out a strong prima facie case justifying waiver of condition of pre-deposit. In view of the above requirement of pre-deposit of Cenvat credit demand interest and penalty is waived and the recovery thereof stayed pending disposal of the appeal - Stay granted.

Summary

Issues:
1. Eligibility for Cenvat credit on duty paid for plastic waste containing granules used in manufacturing plastic bottles for I.V. fluids.
2. Justification for demand of Cenvat credit on granules emerged as waste.
3. Appeal against order-in-original confirming demand of Cenvat credit, interest, and penalty.

Analysis:

Issue 1:
The appellants, manufacturers of I.V. fluids, availed Cenvat credit on duty paid for LDPE granules used in manufacturing plastic bottles. The department contended that Cenvat credit on granules in plastic waste was not eligible. A show cause notice demanded repayment of allegedly wrongly taken Cenvat credit of Rs. 37,69,281 along with interest and penalty. The Additional Commissioner upheld the demand, which was confirmed in the order-in-appeal by the Commissioner. The appellant appealed against this decision.

Issue 2:
During the hearing, the Associate Vice-President of the appellant argued that Cenvat credit was only taken on granules in plastic waste, not those used in manufacturing bottles for I.V. fluids. He asserted that paying duty on plastic waste justified the credit taken. The appellant claimed a strong prima facie case against the demand for Cenvat credit on the granules that became waste. The Revenue opposed the stay application, supporting the previous findings.

Issue 3:
After considering both parties' submissions and reviewing the records, the Tribunal found that the appellants had availed Cenvat credit on inputs leading to waste, for which excise duty had been paid. The Tribunal acknowledged a strong prima facie case for waiving the pre-deposit condition. Consequently, the requirement for pre-deposit of Cenvat credit demand, interest, and penalty was waived, and recovery stayed pending the appeal's disposal. The appeal was scheduled for further proceedings.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's decision to waive the pre-deposit condition based on the prima facie case made by the appellants regarding the Cenvat credit on duty paid for plastic waste containing granules used in manufacturing plastic bottles for I.V. fluids.