2009 (7) TMI 952 - AT - Central Excise

Summary

Issues Involved:
1. Wrongful availing of Cenvat credit on structural items and other materials.
2. Applicability of extended period of limitation.
3. Prima facie case for grant of stay of the impugned order.
4. Financial hardship and requirement for deposit of duty amount.

Issue-wise Detailed Analysis:

1. Wrongful Availing of Cenvat Credit:
The appellants challenged the order disallowing Cenvat credit on structural items like angles, channels, beams, plates, oxygen gas, and building electrodes, arguing these were used in the manufacture of final products. The Department contended these items were used for repair or maintenance, not as inputs or capital goods in manufacturing. The Tribunal referred to the Apex Court's decision in J.K. Cotton Spg. & Wvg Mills Co. Ltd., which clarified that goods must be directly related to the production process to qualify for Cenvat credit. The Tribunal concluded that goods used in structural fabrication do not qualify as inputs in manufacturing the final product, rejecting the appellants' claim.

2. Applicability of Extended Period of Limitation:
The appellants argued that the major part of the claim was barred by the law of limitation and that the Department was aware of their Cenvat credit practices since 2004. The Department invoked the extended period of limitation, alleging suppression of facts with intent to evade duty. The Tribunal upheld this, noting that the appellants had not voluntarily declared the emergence of the structures in their ER-1 returns, which amounted to suppression of facts. The Tribunal found no material evidence to contradict the Commissioner's finding and agreed that the extended period was rightly invoked.

3. Prima Facie Case for Grant of Stay:
The Tribunal assessed whether the appellants made a prima facie case for staying the impugned order. It considered the factual aspects and the law laid down by the Apex Court, concluding that the appellants did not establish a prima facie case. The Tribunal noted that the goods in question were used in structural fabrication, not directly in manufacturing the final product, thus no prima facie case for stay was made out.

4. Financial Hardship and Requirement for Deposit of Duty Amount:
The Tribunal evaluated the appellants' claim of financial hardship, noting that Section 35F requires a clear demonstration of financial hardship, which the appellants failed to provide. Consequently, the Tribunal ordered the deposit of the entire duty amount within 12 weeks but granted a waiver for the interest and penalty amounts during the appeal's pendency.

Conclusion:
The Tribunal dismissed the stay application concerning the duty amount but allowed it partially by waiving the interest and penalty amounts. The appellants were directed to deposit the duty amount within 12 weeks and report compliance. The stay application was disposed of accordingly, with compliance to be reported on 23-10-09.