2014 (10) TMI 89 - AT - Central Excise

Denial of CENVAT Credit - capital goods installed in appellant s premises belonged to the job worker - Held that - Reason mentioned for non-appearance before Tribunal is reasonable. Accordingly, the appellant s prayer for recall of stay order ordering predeposit of entire duty amount and the MISC application for recalling the stay order is allowed and the stay order No.40645/2014 dt 2.5.2014 is recalled and restored to its original number - There is no dispute on the fact that the appellants availed capital goods credit on the machinery purchased by their job worker and installed in appellant s premises for carrying out the job work inside their factory - prima facie, the applicants have made out a case for waiver of entire amount of demand along with interest and penalty. Accordingly, predeposit of entire dues arising out of impugned order is waived and its recovery thereof stayed till pendency of the appeal - Stay granted.

Summary

Issues:
1. Modification of Stay Order
2. Denial of Cenvat Credit on Capital Goods

Issue 1: Modification of Stay Order
The appellant filed a miscellaneous application seeking modification of the Stay Order directing a predeposit of duty amount. The appellant's representative did not appear at the hearing due to not receiving the notice. The advocate submitted that the appellant authorized him after receiving the order and requested to accept the application. The Tribunal found the reason for non-appearance reasonable and allowed the recall of the stay order.

Issue 2: Denial of Cenvat Credit on Capital Goods
The case involved the denial of cenvat credit on capital goods used by the appellant, a manufacturer of mosquito coils. The job worker installed plant and equipment in the appellant's premises for processing. The dispute arose regarding ownership of the capital goods and the expiry of the contract. The advocate argued that ownership is not relevant for availing cenvat credit as long as the goods are used in manufacturing final products within the appellant's factory premises. The advocate cited relevant court and tribunal decisions to support the appellant's position.

Judgment:
After considering the arguments from both sides and reviewing the records, the Tribunal found the appellant eligible for cenvat credit on the machinery installed by the job worker in their premises. Citing a judgment from the Hon'ble Gujarat High Court, the Tribunal held that the appellant fulfilled the conditions for availing credit on capital goods used in manufacturing excisable items. Consequently, the Tribunal waived the entire demand amount, interest, and penalty, and stayed the recovery pending the appeal. The stay application was allowed, and the predeposit of dues was waived.

This detailed analysis of the judgment highlights the issues of modification of the stay order and denial of cenvat credit on capital goods, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.