2014 (9) TMI 711 - AT - Central Excise

Waiver of pre deposit - Cenvat credit - Cenvat credit which was available in the books of account of EOU was transferred into the books of account of DTA unit - Held that - Prima facie, we are of the view that the applicant has made out a strong case for waiver of pre-deposit based on precedent decisions of the Tribunal as cited above. So pre-deposit of dues arising from the impugned order is waived for admission of appeal and there shall be no collection of such dues during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Transfer of Cenvat credit from EOU to DTA unit.
2. Interpretation of Rule 10 of Cenvat Credit Rules, 2004.
3. Validity of objection raised by Revenue.
4. Pre-deposit for admission of appeal.

Transfer of Cenvat credit from EOU to DTA unit:
The case involved two units, one operating as a DTA unit and the other as a 100% EOU, which later merged into a single DTA unit. The Revenue objected to the transfer of Cenvat credit from the EOU to the DTA unit, leading to a confirmed amount against the applicant. The applicant argued that the merger allowed for the transfer of credit, citing Rule 10 of Cenvat Credit Rules, 2004. The Tribunal found merit in the applicant's argument, considering similar precedents where waivers were granted in comparable situations. Consequently, the Tribunal waived the pre-deposit of dues for the admission of the appeal.

Interpretation of Rule 10 of Cenvat Credit Rules, 2004:
The applicant contended that Rule 10 of the Cenvat Credit Rules, 2004 should apply to allow the transfer of Cenvat credit post-merger of the two units. The Revenue, on the other hand, argued that Rule 10 did not cover the conversion from EOU to DTA, emphasizing that it only pertained to changes in unit ownership. However, the Tribunal sided with the applicant, considering the circumstances of the merger and the availability of credit to both units before consolidation.

Validity of objection raised by Revenue:
The Revenue objected to the transfer of Cenvat credit post-merger, leading to the recovery of the transferred amount along with interest and penalty. The applicant highlighted that the merger and credit transfer were duly communicated to the Department, strengthening their case against the objection raised by the Revenue. The acknowledgment of the merger by the Deputy Commissioner of Central Excise further supported the applicant's position.

Pre-deposit for admission of appeal:
In response to the appeal filed by the applicant against the order of the Commissioner, a stay petition for waiver of pre-deposit was submitted. The Tribunal, after considering the arguments from both sides and the precedents cited, found that the applicant had presented a strong case for the waiver of pre-deposit. Consequently, the Tribunal waived the pre-deposit of dues arising from the impugned order, allowing the appeal to proceed without the collection of such dues during its pendency.