2015 (3) TMI 340 - AT - Central Excise

Waiver of pre-deposit of duty, interest and penalties - benefit of Notification No. 23/2003-CE and 52/2003 Cus both dated 31.03.2003 - Held that - Rule 17 clearly stated that for payment of duty on clearance of any goods the applicant being 100% EOU could utilize CENVAT Credit account. Therefore, prima facie the applicant has made out a case for waiver of the requirement of pre-deposit of Central Excise and Customs duty, interest and penalties. Accordingly, we grant waiver of the pre-deposit of the entire amounts adjudged in the impugned order and stay recovery thereof during the pendency of the appeals. - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalties.
2. Utilization of CENVAT Credit account for payment of duty.
3. Invocation of extended period of limitation.
4. Financial hardship and revenue neutrality considerations.

Analysis:

Issue 1: Waiver of pre-deposit of duty, interest, and penalties
The applicant sought waiver of pre-deposit of duty, interest, and penalties imposed in the impugned order. The Tribunal examined Rule 17 of the Cenvat Credit Rules, 2004, which allows payment through CENVAT Credit account for goods cleared by a 100% EOU to the domestic tariff area. The Tribunal noted that the applicant, being a 100% EOU, could utilize the CENVAT Credit account for duty payment. Consequently, the Tribunal granted waiver of the pre-deposit of the entire amounts adjudged in the impugned order and stayed the recovery during the appeal process.

Issue 2: Utilization of CENVAT Credit account for payment of duty
The Revenue contended that if the applicant had not paid duty on the inputs, they should pay duty on goods clearance through PLA as per Rule 3(4) of the Cenvat Credit Rules, 2004. The Tribunal, however, emphasized that Rule 17 specifically allowed the utilization of the CENVAT Credit account for duty payment by a 100% EOU. The Tribunal found the applicant's reliance on a relevant case law and the provisions of Rule 17 to be valid, supporting the waiver of pre-deposit.

Issue 3: Invocation of extended period of limitation
The Revenue invoked the extended period of limitation due to the applicant's alleged suppression of facts regarding input clearance. The applicant argued against this, stating that they regularly filed monthly returns and utilized the CENVAT Credit account for clearance, making the extended period unsustainable. The Tribunal considered this argument but ultimately based its decision on the applicant's eligibility to use the CENVAT Credit account under Rule 17, granting the waiver.

Issue 4: Financial hardship and revenue neutrality considerations
The applicant highlighted financial hardship due to registration under BIFR and requested a stay based on revenue neutrality. The Revenue opposed this, stating that the Tribunal should not consider financial hardship at this stage. The Tribunal noted that the applicant's ability to utilize the CENVAT Credit account for duty payment aligned with the rule, leading to the waiver of pre-deposit. The Tribunal did not find the situation to be one of revenue neutrality, emphasizing the applicant's eligibility for the waiver based on legal provisions.

In conclusion, the Tribunal granted the waiver of pre-deposit of duty, interest, and penalties to the applicant, allowing them to stay recovery during the appeal process based on the provisions of Rule 17 and the applicant's eligibility to utilize the CENVAT Credit account for payment of duty.