2014 (4) TMI 764 - AT - Central Excise

Waiver of pre deposit - Denial of MODVAT Credit - Revenue neutrality - Held that - There is no dispute about the fact that the appellant have paid countervailing duty at the time of import of the goods on MRP declared by M/s DMS Corporation. The Revenue has confirmed excise duty by adopting the same MRP. Even if the Revenue s contention is accepted at this prima facie stage, the appellant would be entitled to Modvat credit of CVD paid at the time of import thus, neutralizing the entire duty confirmed - Stay granted.

Summary

Issues:
Dispensing with pre-deposit of duty and penalty based on Revenue neutrality and longer period of limitation.

Analysis:
The appellant imported motor vehicle components and paid Countervailing Duty (CVD) at clearance, availing credit in their RG-23D and issuing cenvatable invoices. Revenue raised Central Excise duty demand, treating the activity of putting goods in plastic bins as manufacturing, invoking longer limitation period.

The appellant's advocate contested the limitation issue, arguing regular returns filing and Revenue awareness, denying suppression. He emphasized the appellant's entitlement to Cenvat credit exceeding the duty payable, urging an interim stay based on Revenue neutrality.

The Revenue countered, citing Section 2(f)(iii) to define activities like re-packing and re-labeling as manufacturing, asserting non-disclosure in monthly returns. They differentiated between Revenue neutrality and Cenvat credit availability, justifying the longer limitation period invocation.

The Tribunal acknowledged the Revenue neutrality plea, favoring the appellant despite the manufacturing activity uncertainty and limitation issue. Citing a previous stay order, the Tribunal dispensed with pre-deposit conditions, granting an interim stay on duty and penalty recovery during the appeal.