2015 (10) TMI 1145 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - Held that - There is no dispute about the correctness of the availed credit by the appellant. The same has to beutilised by the appellant for payment of duty on the manufactured final product. Instead the appellants have utilised the same for payment of duty at the time of clearance of imported inputs into DTA. Undoubtedly in matters of CENVAT credit, there is no one-to-one correlation and if the appellants have used such credit for payment of duty for clearance of imported raw materials, they would not be in a position to use the same at the time of clearance of the final product. As such at this stage by treating the said reversal as proper, I dispense with the condition of pre-deposit and remand the matter to Commissioner (Appeals) for decision on merits without insisting on any pre-deposit. - Stay granted.

Summary

Issues:
1. Dismissal of appeal for non-compliance with stay order directing deposit of duty.
2. Utilization of CENVAT credit for payment of duty on imported inputs.

Analysis:
1. The judgment addresses the dismissal of the appeal by the Commissioner (Appeals) due to non-compliance with a stay order requiring the appellant to deposit the duty amount. The appellant, a manufacturer of bulk drugs and intermediates, had availed CENVAT credit on duty paid inputs for the manufacture of finished goods. The Department permitted clearance of duty-free inputs into the Domestic Tariff Area (DTA) subject to the condition of payment of applicable duties. The appellant utilized the availed credit for duty payment on clearances of imported inputs into DTA, which the Revenue contended was improper.

2. The Tribunal found the issue to be contentious, emphasizing the necessity for the appellant to utilize the availed credit for duty payment on the final manufactured product. However, the appellant had used the credit for duty payment on imported inputs clearance into DTA, impacting their ability to use the credit for the final product clearance. Acknowledging the lack of one-to-one correlation in CENVAT credit matters, the Tribunal dispensed with the pre-deposit condition and remanded the case to the Commissioner (Appeals) for a decision on merits without requiring any pre-deposit, thereby disposing of the stay petition and appeal accordingly.

This judgment highlights the importance of proper utilization of CENVAT credit and the implications of using such credit for duty payments on different stages of production and clearance. The decision provides clarity on the issue at hand and offers a resolution by remanding the matter for further consideration without the pre-deposit requirement.