2012 (5) TMI 114 - AT - Central Excise

Application for waiver of pre-deposit of duty - Cenvat credit on wagons as capital gain - Classification - rule 2(a) of Cenvat Credit Rules, 2004 - Held that the wagons are classifiable under chapter 86 of the Central Excise Tariff and the same is not covered under the definition of capital goods. Further, we find that the wagons cannot be considered as components, spares and accessories of the specified goods. In view of this, we find that the applicant has not made out a case for waiver of duty no financial hardship is pleaded during the arguments - Decided against the assessee

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty based on the classification of wagons as capital goods under Cenvat Credit Rules.

Analysis:
The applicant sought a waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 1,09,36,128/- and Rs. 10,00,000/- respectively. The dispute arose from the denial of credit for wagons used in the activity of repacking cement, which the Revenue classified under Chapter 86 of the Central Excise Tariff. The applicant contended that wagons should be considered material handling equipment and thus eligible for credit as capital goods under Rule 2(a) of Cenvat Credit Rules, 2004.

The Revenue's position was that wagons did not fall under the definition of capital goods as per Rule 2(a) of Cenvat Credit Rules, emphasizing that wagons were not specified goods or accessories of specified capital goods. The Tribunal examined the definition of capital goods under Rule 2(a) and noted that wagons, classified under Chapter 86, did not meet the criteria outlined in the rule. The Tribunal concluded that wagons could not be considered components, spares, or accessories of specified goods, thereby rejecting the applicant's claim for waiver of duty.

Considering the facts and circumstances of the case, the Tribunal directed the applicants to deposit the entire duty amount within eight weeks, totaling Rs. 1,09,36,128/-, in line with the provisions of section 35 of the Central Excise Act. Upon compliance with this directive, the pre-deposit of interest and penalties would be waived for the appeal hearing scheduled for a specified date.

In summary, the judgment centered on the classification of wagons as capital goods under Cenvat Credit Rules, with the Tribunal ultimately ruling against the applicant's claim for a waiver of duty based on the specific provisions and definitions outlined in the rules.