2012 (8) TMI 850 - AT - Central Excise

CENVAT Credit - import of N-Butyl acetate and selling the same - Whether this activity is trading activity or not - Held that - appellant after importing N-Butyl acetate in bulk and cleared the same in smaller packs after repacking as such in view of Chapter Note 10 of Chapter 29 the activity carried out by the appellant amounts to manufacture. As such the appellant has rightly cleared the goods on payment of excise duty and availed the Cenvat credit on CVD paid by him. In the alternative, it is contended that even if the plea of the department is accepted that the activity carried out by the appellant did not amount to manufacture the department after having accepted the excise duty is not justified in denying the Cenvat credit on the inputs i.e. N-Butyl acetate. Thus, it is submitted that appellant has a strong prima facie case to justify the waiver of condition of pre-deposit of duty, so far as Cenvat credit in relation to N-Butyl acetate is concerned - Conditional stay granted.

Summary

Issues:
1. Confirmation of duty demand on importing and repacking N-Butyl acetate.
2. Denial of Cenvat credit on the imported N-Butyl acetate.
3. Appeal for waiver of pre-deposit condition regarding duty demand.

Analysis:

Issue 1:
The appellant faced a duty demand of Rs. 31,58,129/- for importing N-Butyl acetate in bulk, repacking it, and clearing smaller packs with excise duty payment. The department contended that this activity constituted trading, not subject to excise duty, leading to the denial and confirmation of Cenvat credit of Rs. 28,64,826/-. The appellant offered to pre-deposit the remaining amount of duty to avoid detailing the facts of the other two counts.

Issue 2:
The appellant's advocate argued that the repacking of N-Butyl acetate amounted to manufacturing under Chapter Note 10 of Chapter 29, justifying the excise duty payment and Cenvat credit availed. Even if the department's view was accepted, denying Cenvat credit on the inputs was unjustified. The appellant sought waiver of pre-deposit for the Cenvat credit related to N-Butyl acetate, offering to deposit Rs. 3 lakhs for the other demands.

Issue 3:
The department opposed the waiver, asserting that the appellant, not being a manufacturer, was ineligible for Cenvat credit on the imported N-Butyl acetate. After considering the arguments, the Tribunal partially allowed the stay application, directing the appellant to deposit Rs. 3 lakhs within four weeks. Compliance would result in waiving the pre-deposit requirement for the remaining penalty amount, with recovery stayed until the appeal's disposal.

This judgment highlights the complex interplay between manufacturing activities, excise duty obligations, and Cenvat credit eligibility concerning the import and repacking of goods. The Tribunal's decision to allow partial stay and waiver of pre-deposit showcases a nuanced approach to balancing the interests of the appellant and the revenue authorities pending the final appeal resolution.