2015 (7) TMI 62 - AT - Central Excise

Waiver of pre dpeosit - Cenvat credit - failure to maintain separate accounts - appellant should have paid 10%/5% of the value of the exempted goods - Held that - There is no dispute that the appellants are reversed the entire cenvat credit attributable to the exempted goods. The only omission is non-exercise of option before doing so after the introduction of Rule 6(3A) and non-maintenance of separate accounts earlier to that. Since the appellants have reversed the entire amount of credit attributable to exempted goods and the omissions seem to only procedural in nature, we consider that appeal can be heard without insisting on any pre-deposit. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Summary

Issues:
Cenvat credit demand for exempted final products under Rule 6(3)(i) of Cenvat Credit Rules 2004.

Analysis:
The judgment addresses the demand of Cenvat credit amounting to 49,71,88,770/- for exempted final products cleared by the appellants from September 2007 to June 2012. The demand was based on the appellant's failure to maintain separate accounts and not exercising the option required under Rule 6(3A) of Cenvat Credit Rules 2004. The authorities imposed a penalty equal to the duty amount due to these omissions. However, upon hearing both parties, it was noted that the appellants had reversed the entire cenvat credit related to exempted goods, indicating compliance in substance. The only issues were the failure to exercise the option before reversal under Rule 6(3A) and the lack of separate account maintenance. As these were procedural lapses and the appellants had rectified the substantive aspect, the tribunal waived the requirement of pre-deposit and granted a stay against recovery during the appeal process.

This judgment highlights the importance of compliance with procedural requirements under the Cenvat Credit Rules 2004, particularly regarding maintaining separate accounts and exercising options for credit reversal. Despite the omissions in these procedural aspects, the tribunal considered the substantive compliance of the appellants in reversing the entire credit attributable to exempted goods. The decision to waive the pre-deposit requirement and grant a stay against recovery reflects a balanced approach by the tribunal, recognizing the rectification of substantive non-compliance while addressing the procedural shortcomings. The judgment underscores the significance of adherence to both substantive and procedural aspects of tax laws to avoid penalties and ensure a fair hearing in appeal proceedings.