2014 (10) TMI 156 - AT - Central Excise

Wavier of pre-deposit - Denial of input service credit - manufacturing as well as trading activity - Held that - applicant is not entitled to take CENVAT credit. With regard to the limitation issue and the intention of the applicant to avail credit will be seen at the time of final hearing of the appeal. Therefore, at this stage, we direct the applicant to pre-deposit a sum of ₹ 70,00,000 within eight weeks from today. On such compliance being reported, balance amount of duty, interest and penalty shall remain waived during the pendency of the appeal. - Stay granted partly.

Summary

Issues:
1. Waiver of pre-deposit of total duty demand.
2. Entitlement to input service credit for manufacturing and trading activities.
3. Invocation of period of limitation.
4. Applicant's intention to avail credit.

Issue 1: Waiver of pre-deposit of total duty demand
The applicant sought waiver of pre-deposit of total duty demand amounting to Rs. 2,34,11,652/- along with interest and penalty. The Tribunal considered the submissions made by the applicant's advocate, who acknowledged that the applicant was not entitled to input service credit for both manufacturing and trading activities simultaneously. The advocate argued that since there was no malafide intention to avail inadmissible credit, waiver of pre-deposit should be granted. The Tribunal, after hearing both sides, directed the applicant to pre-deposit a sum of Rs. 70,00,000/- within eight weeks, with the balance amount of duty, interest, and penalty waived during the appeal's pendency.

Issue 2: Entitlement to input service credit for manufacturing and trading activities
The Tribunal noted that the impugned demands for the period 2007-08 and 2011-12 were confirmed against the applicant as they had taken credit for both manufacturing and trading activities during the said period, rendering them ineligible for input service credit. The applicant's advocate admitted that based on a previous Tribunal judgment, the applicant was not entitled to such credit for both activities simultaneously. Therefore, the Tribunal found that on merits, the applicant was not entitled to take CENVAT credit.

Issue 3: Invocation of period of limitation
The demand was confirmed by invoking the period of limitation. The applicant's advocate argued that there was no malafide intention on the applicant's part to avail inadmissible credit. The Tribunal decided that the limitation issue and the applicant's intention to avail credit would be examined during the final hearing of the appeal. Consequently, the Tribunal directed the applicant to make a specified pre-deposit within a set timeframe.

Issue 4: Applicant's intention to avail credit
The applicant's advocate submitted that since there was no malafide intention on the applicant's part to avail inadmissible credit, waiver of pre-deposit should be granted. The Tribunal considered this argument but directed the applicant to make a pre-deposit while stating that the intention of the applicant to avail credit would be assessed during the final hearing of the appeal.

This detailed analysis of the judgment covers the issues of waiver of pre-deposit, entitlement to input service credit, invocation of the period of limitation, and the applicant's intention to avail credit, providing a comprehensive overview of the Tribunal's decision.