2015 (3) TMI 517 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - credit taken on molasses and mash tone - Held that - As far as the demand for reversal of credit in respect of molasses consumed in the manufacture of denatured spirit, prima facie , we do not find any merit in the contention of the Revenue that the appellant was not entitled to take credit at all. As regards the reversal of credit on rectified spirit cleared as such the appellant has discharged a sum @6% of the value of the rectified spirit cleared as such. In these circumstances, and also considering the decisions of the Tribunal 2006 (9) TMI 59 - CESTAT,BANGALORE and 2007 (4) TMI 31 - CESTAT,BANGALORE , the appellant has made out a strong case for grant of waiver of pre-deposit. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.

Summary

Issues:
- Appeal against Order-in-Original confirming demand of CENVAT credit on molasses and mash tone
- Imposition of penalty on the appellant
- Entitlement of the appellant to take credit on rectified spirit and reversal of credit

Analysis:
1. The appeal and stay petition were filed against Order-in-Original confirming a demand of Rs. 96,07,807/- for ineligible CENVAT credit on molasses and mash tone under CENVAT Credit Rules, 2004. A penalty of Rs. 9 lakhs was also imposed on the appellant. The appellant contended that the rectified spirit, an excisable product, was manufactured from molasses, and excise duty liability was discharged on the final product. The appellant argued that the demand for credit on molasses used in manufacturing rectified spirit was not sustainable as excise duty was paid on the final product. The appellant cited Tribunal decisions supporting their claim and requested a stay on recovery.

2. The Revenue, represented by the Addl. Commissioner, maintained that the appellant was not entitled to credit on rectified spirit cleared as a non-excisable item. They argued that the appellant should have reversed the credit of duty paid on molasses used in manufacturing rectified spirit cleared as a non-excisable item. The Revenue requested the appellant to comply with the terms of reversal.

3. The Tribunal analyzed the submissions and found no merit in the Revenue's contention regarding the reversal of credit on molasses used in manufacturing denatured spirit. The Tribunal noted that the appellant had paid a percentage of the value of rectified spirit cleared as a non-excisable item. Considering Tribunal decisions and the Bombay High Court's rulings, the Tribunal granted unconditional waiver from pre-deposit of the dues adjudged against the appellant and stayed recovery during the appeal's pendency. The Tribunal found that the appellant had a strong case for waiver based on the circumstances and legal precedents cited.

This judgment highlights the dispute over CENVAT credit on molasses and rectified spirit, the imposition of a penalty, and the Tribunal's decision to grant waiver and stay recovery during the appeal process.