2015 (12) TMI 252 - AT - Central Excise

Waiver of pre deposit - Job Work activity for the principal availing area based exemption - Manufacture of copper ignots - Assessee contend that they are liable for service tax not excise duty - Held that - Activity of Namo is manufacture,not service and the same would attract Central Excise duty and Namo would not be eligible for duty exemption under Notification No. 214/86-CE as Havells the principal manufacturer, were availing full duty exemption under Notification No. 50/03-CE in respect of the finished products manufactured and cleared by them. As regards the question of limitation there is no explanation as to why during period from January 2007 to January 2008 no duty was paid. In respect of period from February 2008 onward the appellant s explanation is that they exercised the bonafide belief that their activity is service and they paid service tax on the job charges, but in respect of period prior to February 2008 there is no explanation for non-payment of duty. In any case the question of limitation is a mixed question of facts and law which has to be examined at the stage of final hearing. Therefore, so far as the duty demand of ₹ 22,83,289/- against Namo is concerned, we are of the view that this is not the case for total waiver - Partial stay granted.

Summary

Issues involved: Duty demand on aluminum ingots manufactured by Namo for Havells, admissibility of Cenvat credit on copper ingots, penalty imposition on various parties.

Analysis:

1. Duty Demand on Aluminum Ingots:
The appeal arises from an order-in-appeals passed by the Commissioner, Central Excise (Appeals), Delhi, regarding duty demand on aluminum ingots manufactured by Namo for Havells. The primary issue is whether Namo is liable to pay duty or eligible for exemption under Notification No. 214/86-CE for clearances of aluminum ingots to Havells. The Department contended that as Havells availed full duty exemption under Notification No. 50/03-CE, Namo should not be eligible for exemption under Notification No. 214/86-CE. The Tribunal observed that Namo's activity of manufacturing aluminum ingots for Havells constitutes manufacture, not service, attracting Central Excise duty. The Tribunal directed Namo to deposit a specified amount within a stipulated period, allowing waiver from the requirement of pre-deposit of the balance amount of duty demand, interest, and penalty upon compliance.

2. Admissibility of Cenvat Credit:
Another point of dispute was the admissibility of Cenvat credit taken by Namo based on invoices for copper ingots issued by M/s V.K. Metal and Vardhman Sales Agency. The Department alleged that M/s V.K. Metal issued bogus invoices without any manufacturing activity. However, the Tribunal noted that the prima facie view taken in a related case involving M/s V.K. Metal indicated that the allegation of issuing bogus invoices was not sustainable. Consequently, the Tribunal found no prima facie case against Namo, Vardhman Sales Agency, and other related parties, leading to the waiver of the requirement of pre-deposit of penalty.

3. Penalty Imposition:
The penalty imposition on various parties, including Vardhman Sales Agency, M/s V.K. Metal, transporters, and individuals, was based on the same grounds as the duty demand related to Cenvat credit on copper ingots. However, since the Tribunal found no prima facie case against these parties due to the related case involving M/s V.K. Metal, the penalty imposition was deemed unsustainable. The Tribunal allowed waiver from the requirement of pre-deposit of penalty for the concerned parties, pending the hearing of their appeals.

In conclusion, the Tribunal's judgment addressed the duty demand on aluminum ingots, the admissibility of Cenvat credit, and penalty imposition on various parties. The decision highlighted the importance of compliance and specified deposit amounts within stipulated periods, while allowing waivers based on the circumstances of each issue.