2015 (3) TMI 208 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - Imposition of interest & penalty - Held that - Authority has clearly recorded that the total Cenvat Credit in respect of common inputs services taken by them was not reversed and only an amount of ₹ 80,006/- was reversed by them. Further, the adjudicating authority has also observed that the reversal of Cenvat credit subsequently in this manner does not absolve them from the obligation under Rule 6(3) of the Cenvat Credit Rules, more so when the period involved in this case is outside the period for which a retrospective amendment was made to give relief to the assessee in such situation where for relatively small amount of Cenvat credit on common input/common inputs services, relatively large liabilities arose due to the operation of Rule 6(3) ibid. While detailed analysis of the appellants contentions is not warranted at the stage of deciding their stay application, prima facie, it is evident that the appellants had indeed taken Cenvat Credit of common input services. Therefore prima facie the impugned order does not seem to suffer from any legal infirmity. Thus, while the appellants have not been able to make out a good prima facie case to justify full waiver of pre-deposit, having regard to the appellants contention regarding non-invocability of the extended period, we are of the view that a pre-deposit of ₹ 75 lacs would meet the requirements of Section 35F of Central Excise Act, 1944. - Partial stay granted.

Issues:
1. Central Excise demand confirmation for the period 2007-2008 to 2011-2012.
2. Applicability of Rule 6(3) of Cenvat Credit Rules regarding exempted goods.
3. Reversal of Cenvat credit related to common input services.
4. Obligation under Rule 6(3) of Cenvat Credit Rules.
5. Prima facie case for waiver of pre-deposit.
6. Pre-deposit amount determination and compliance deadline.

Central Excise Demand Confirmation:
The appeal was filed against the Order-in-Original confirming a Central Excise demand of Rs. 1,46,83,687 for the period 2007-2008 to 2011-2012, along with interest and penalties under Rule 15(3) and Rule 15(2) of Cenvat Credit Rule 2004.

Applicability of Rule 6(3) of Cenvat Credit Rules:
The appellants, engaged in manufacturing safety shoes, handling gloves, and work wears, had taken Cenvat Credit of common input services. As per Rule 6(3) of Cenvat Credit Rules, they were required to pay a percentage of the value of exempted goods cleared by them. The Order-in-Original was passed due to non-compliance with this rule.

Reversal of Cenvat Credit:
The appellants contended that they had only taken credit for security services and had reversed the amount related to it. They argued against the requirement to pay a percentage of the value of exempted goods cleared by them, stating that there was no willful misstatement or suppression on their part.

Obligation under Rule 6(3) of Cenvat Credit Rules:
The adjudicating authority noted that the total Cenvat Credit for common input services was not fully reversed by the appellants, despite reversing a specific amount. The authority emphasized that the reversal of credit did not absolve the appellants from the obligations under Rule 6(3) of the Cenvat Credit Rules.

Prima Facie Case for Waiver of Pre-Deposit:
While the appellants failed to establish a strong prima facie case for a full waiver of pre-deposit, the Tribunal considered their contention regarding the non-invocability of the extended period. A pre-deposit of Rs. 75 lakhs was ordered within a specified deadline, with recovery of the remaining duty, interest, and penalties stayed during the appeal's pendency.

Pre-Deposit Amount Determination and Compliance Deadline:
The Tribunal determined the pre-deposit amount of Rs. 75 lakhs to meet the requirements of the Central Excise Act, 1944. The appellants were given six weeks to comply, with a deadline for filing the compliance set for a specific date. Failure to comply would result in the dismissal of the appeal for pre-deposit default.

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