2010 (2) TMI 1001 - AT - Central Excise

Waiver of pre-deposit - CENVAT credit - capital goods - Held that - so far as the denial of CENVAT credit amounting to ₹ 79,11,624/- on the basis of invoice No. 01 dated 29-6-06 of M/s. HCL Peripherals is concerned, the Appellant have not been able to establish prima-facie case in their favour. Therefore, this is not a case for granting full waiver - On deposit of this amount within the stipulated period, the pre-deposit of rest of the Cenvat credit demand, interest and penalty shall stand waived and recovery thereof stayed till the disposal of this appeal - appeal allowed in part.

Summary

Issues:
Waiver of pre-deposit of Cenvat credit demand, interest, and penalty; Correct classification of goods for availing Cenvat credit; Applicability of longer limitation period for invoking penalty; Prima facie case for granting waiver.

Waiver of Pre-Deposit:
The Appellant, engaged in software development, sought waiver of pre-deposit of Cenvat credit demand of Rs. 80,20,528/- along with interest and penalty imposed by the Commissioner. The main item in dispute was the "FACT - 10 Meter RF Shielded in EMC Chamber." The Appellant argued that the equipment was correctly classifiable under heading 90.30 and thus qualified as capital goods. The Commissioner, however, upheld the demand, leading to the appeal. The Appellant contended that the incorrect tariff classification in the supplier's invoice should not disentitle them from availing Cenvat credit, citing relevant tribunal judgments. The Department opposed the waiver, asserting that the item was not covered by the definition of capital goods or inputs, and the Appellant had not disclosed relevant facts.

Correct Classification of Goods:
The Appellant's plea for waiver centered on the classification of the disputed equipment. The Appellant claimed the item was wrongly classified by the supplier under heading 73.08 instead of 90.30, making it eligible for Cenvat credit. However, the Department argued that the item, labeled as 'FACT-10 equipment,' was a steel chamber, correctly classified under 73089080, and not eligible for credit as capital goods or inputs. The Tribunal analyzed previous judgments emphasizing that the classification determined by the supplier could not be challenged at the receiver's end for availing Cenvat credit.

Applicability of Longer Limitation Period:
Regarding the longer limitation period invoked by the Department, the Tribunal noted that the absence of supplier invoices with ST-3 returns made it challenging for central excise officers to verify the correctness of Cenvat credit. The Appellant's claim that audits proved Departmental knowledge was dismissed, affirming the correct invocation of the longer limitation period.

Prima Facie Case for Waiver:
After evaluating both parties' submissions, the Tribunal concluded that the Appellant failed to establish a prima facie case in their favor concerning the denial of Cenvat credit amounting to Rs. 79,11,624. Consequently, the Tribunal directed the Appellant to deposit this amount within six weeks, with the waiver of the remaining pre-deposit and stay on recovery contingent on compliance.

In summary, the judgment addressed the waiver of pre-deposit, correct classification of goods for Cenvat credit eligibility, the application of a longer limitation period, and the establishment of a prima facie case for granting waiver, ultimately directing the Appellant to deposit a specified amount pending further proceedings.