2014 (10) TMI 375 - AT - Central Excise

Waiver of pre deposit - Cenvat credit - Receipt of rejected goods - prescribed records - Held that - according to Rule 16 any rejected goods on which duty has been paid can be brought back to the premises of a manufacturer for any reason and by following the procedure prescribed therein. What is required to be shown is that the goods have been accounted for. Now there are no prescribed statutory records in Central Excise law except for daily stock account the proforma of which is prescribed and is statutorily required to be maintained. Therefore an assessee is free to maintain records which according to him are required and sufficient for the purpose for which he maintains the records. In this case it is not the case of the department that the records maintained are not sufficient but it is their case that the procedure prescribed in the trade notice has not been followed. Under these circumstances I consider that appellant has made out a prima facie case for waiver and accordingly there shall be waiver of pre-deposit of the entire amount of dues and stay against recovery of the same during the pendency of appeal - Stay granted.

Summary

Issues: Cenvat credit demand, imposition of penalty, compliance with trade notices

Cenvat Credit Demand:
The judgment deals with the demand of Cenvat credit amounting to Rs. 1,74,036 along with interest, and the imposition of a penalty equal to the demanded amount. The appellant argued that they had received rejected goods from the customer, accounted for them in the Cenvat credit account, and completed the manufacturing process without any further action required from their end. The department objected not to the accounting of goods but to the alleged non-compliance with trade notices issued by the Commissioners of Central Excise in Ahmedabad and Madurai. The Tribunal found that the appellant had made a prima facie case for waiver as there was no requirement in Rule 16 to follow trade notices from other jurisdictions. The Tribunal emphasized that the key requirement was to show that the goods had been accounted for, and since the records maintained by the appellant were deemed sufficient, the waiver of pre-deposit of the entire amount of dues was granted, with a stay against recovery during the appeal.

Imposition of Penalty:
The judgment also addressed the imposition of a penalty equal to the demanded Cenvat credit amount. However, the focus of the discussion was primarily on the compliance issue related to the trade notices rather than the penalty itself. The Tribunal's decision to grant a waiver of pre-deposit encompassed both the demand amount and the penalty, indicating that the penalty was contingent upon the Cenvat credit demand issue.

Compliance with Trade Notices:
A significant aspect of the case revolved around the alleged non-compliance with the trade notices issued by the Commissioners of Central Excise in Ahmedabad and Madurai. The appellant argued that there was no legal requirement to adhere to these notices, especially when they were not in the jurisdiction of those Commissioners. The Tribunal concurred with this argument, highlighting that Rule 16 did not mandate following trade notices from other jurisdictions. The Tribunal stressed the importance of maintaining proper records to demonstrate the accounting of goods, rather than strict adherence to external notices. Consequently, the Tribunal granted a waiver of pre-deposit based on the appellant's prima facie case for waiver due to the absence of a legal obligation to comply with the specific trade notices mentioned by the department.