2015 (12) TMI 251 - AT - Central Excise

Waiver of pre deposit - period of limitation - relevant date - Availment of CENVAT Credit - SSI exemption under notification no. 8/03-CE - Held that - As per the provisions of Rule 11(2) of the Cenvat Credit Rules, 2004, when a manufacturer opts for exemption from the whole of duty of excise leviable on the goods manufactured by him, under a notification based on value or quantity of clearances in a financial year and who has been taking cenvat credit on the inputs or input services before such option is exercised, he shall be required to pay an amount equivalent to Cenvat Credit if any, allowed to him in respect of inputs lying in stock or in process or contained in final product lying in stock on the date when such option is exercised and after deducting the such amount from the cenvat credit balance if any, lying in his credit, the cenvat credit balance if any, is still remaining, shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods whether cleared for home consumption or for export. - appellant do not have prima facie case in their favour. In terms of section 11A(3)(ii) the relevant date in case of excisable goods on which duty of excise has not been levied or paid, short levied or short paid, where under the Rules made under this Act, a periodical return showing particulars of duty paid on excisable goods during period to which the said return relates is to be filed by a manufacturer or producer, the date on which such return is so filed is to be treated as the relevant date. Only in the case where no periodical return has been filed though, it was required to be filed, the last date on which such return is to be filed under the said rules would be treated as relevant date. In this case, though the return for April 2007 to June 2007 quarter was required to be filed on 10.07.2007 but the return was actually filed on 14.08.2007 and, therefore, prima facie, it is 14.08.2007 which would have to be treated as the relevant date. - judgment of Delhi High Court in the case of Super Tyres (P) Ltd. vs UOI (2005 (1) TMI 119 - HIGH COURT OF DELHI) is not applicable to the facts of this case. We are, therefore, of the prima facie view that this is not a case for total waiver - Partial stay granted.

Summary

Issues:
1. Whether the appellant correctly reversed the cenvat credit while opting for SSI exemption under notification no. 8/03-CE.
2. Whether the appellant's contention of not being required to reverse the cenvat credit on inputs in process and final product due to the timing of clearances is valid.
3. Whether the show cause notice (SCN) issued to the appellant is within the limitation period.
4. Whether the requirement of pre-deposit should be waived based on previous Tribunal orders and the Delhi High Court judgment.

Analysis:

Issue 1:
The appellant, a manufacturer of Hand Tools, opted for SSI exemption under notification no. 8/03-CE on 31.03.2007. Rule 11(2) of the Cenvat Credit Rules, 2004 mandates that upon opting for exemption, the appellant must reverse the cenvat credit on inputs in stock, inputs in process, and final product lying in stock. The appellant only reversed the credit on inputs in stock but not on inputs in process and final product. The Tribunal held that the appellant should have reversed the balance amount as required by the rules, indicating a lack of prima facie case in their favor.

Issue 2:
Regarding the timing of clearances for home consumption, the appellant argued that since their first clearance for home consumption was on 19.07.2007, they should be treated as having opted for the exemption from that date. However, the Tribunal rejected this argument, stating that when the appellant opted for the exemption on 31.03.2007, they should be considered to have started availing the exemption from that date. Therefore, the provisions of Rule 11(2) applied, and the appellant's plea was not accepted.

Issue 3:
The limitation period for issuing the SCN is crucial. The appellant's return for April 2007 to June 2007 quarter was filed late, on 14.08.2007, instead of the due date of 10.07.2007. The Tribunal explained that the relevant date for calculating the limitation period is the date the return is filed. As the SCN was issued on 18.07.2008, within one year of the relevant date, the Tribunal found the SCN to be prima facie within the time limit.

Issue 4:
Regarding the requirement of pre-deposit, the appellant cited a Delhi High Court judgment and previous Tribunal orders to argue against pre-deposit. The Tribunal differentiated the current situation from the previous proceedings where the issue was not examined on merits. As the issue was now examined on merits, the Tribunal held that the Delhi High Court judgment was not applicable. Consequently, the Tribunal directed the appellant to deposit a specified amount within a stipulated time, after which the pre-deposit requirement would be waived.

This comprehensive analysis of the judgment addresses the key issues involved and provides a detailed understanding of the Tribunal's decision on each issue.