2014 (10) TMI 238 - AT - Central Excise

CENVAT Credit - applicant supplied raw materials to their job worker who manufactured Powerlite Combipack and Ridesect Challenge CDK and cleared the same on payment of duty to the applicant - applicant availed CENVAT credit on the duty paid by Job worker - Held that - Applicant availed CENVAT credit on Combipack / CKD and after certain process cleared the same on payment of duty. It is noticed that the applicant cleared the goods on payment of duty in domestic market as well as for export. Prima facie, we find that the applicant paid the duty at the time of clearance of the goods. The Hon ble Supreme Court in the case of CCE Vs. Narmada Chematur Pharmaceuticals Ltd. - 2004 (12) TMI 93 - SUPREME COURT OF INDIA held that when amount of CENVAT credit wrongly availed is exactly equivalent to the amount of excise duty paid by not availing the exemption, the consequence is revenue neutral, hence demand of such wrong availment of credit has been rightly quashed by the Tribunal. In the present case, it is contended that the applicant paid duty of the same amount of CENVAT credit availed by them, at the time of clearance of goods from their premises and it is a case of revenue neutrality. We find that the applicant has made out a prima facie case for waiver of predeposit of the entire dues. - Stay granted.

Summary

Issues: Dispute over whether the process undertaken by the applicant amounts to manufacture and eligibility to avail CENVAT credit on duty paid by the job worker.

Analysis:
1. Manufacture Dispute: The applicant, engaged in manufacturing mosquito mats and liquidator refills, supplied raw materials to a job worker who manufactured certain products and cleared them on duty payment. The Revenue contended that the process undertaken does not amount to manufacture, thus denying CENVAT credit. However, after examining the records, the Tribunal found that the applicant cleared the goods after certain processes and paid duty for domestic and export markets. Citing a Supreme Court case, it was noted that when the wrongly availed CENVAT credit equals the excise duty paid, resulting in revenue neutrality, the demand for such wrong credit is quashed. In this case, the applicant paid duty equivalent to the CENVAT credit availed, indicating revenue neutrality. Consequently, the Tribunal found a prima facie case for waiving the predeposit of the entire dues.

2. Decision: Considering the arguments and the precedent, the Tribunal granted a waiver of the predeposit of the entire dues and stayed the recovery during the appeal's pendency, allowing the stay application. The judgment was dictated and pronounced in open court by the Tribunal.