2013 (1) TMI 2 - AT - Central Excise

CENVAT credit on capital goods - Remaining credit of 50% availed on subsequent financial year denied - the said bushings, after use, were re-exported for remaking - applicants engaged in manufacture of Glass Fibre by drawing the molten glass through the bushings - Held that - Going through the Rule 4(2) of CRR 2004 the balance of CENVAT Credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding, wheels and the like, and parts thereof falling under heading 6804 of the first schedule to the Excise Tariff Act, are in the possession of the manufacturer of final products. The goods in question are components, which are entitled for capital goods credit. Hence in view of the provisions of Rule 4(2)(b), the condition that the same should be in possession of the manufacturer is not applicable to components. In view of this, the applicants made out a strong prima facie case for complete waiver of pre-deposit. Stay petition is allowed.

Summary

Issues:
- Waiver of pre-deposit of duty, interest, and penalty regarding the credit in respect of capital goods (Bushings).

Analysis:
The Appellate Tribunal CESTAT MUMBAI heard an application for the waiver of pre-deposit of duty amounting to Rs.8,25,84,371, interest, and penalty. The demand was confirmed by denying credit for capital goods, specifically Bushings. The applicants, engaged in manufacturing Glass Fibre, availed 50% credit of duty paid on Bushings and the remaining 50% in the subsequent financial year as per Rule 4(2)(a) & (b) of the Cenvat Credit Rules, 2004. The Revenue contended that the applicants were not entitled to the remaining 50% credit as the Bushings were re-exported after use.

Upon examining Rule 4(2)(a) and (b) of the Cenvat Credit Rules, the Tribunal noted that the provision allows for the balance of CENVAT Credit to be taken in any subsequent financial year if the capital goods are in possession of the manufacturer, excluding certain specified goods. As the goods in question were components entitled to capital goods credit, the possession condition did not apply to components. Therefore, the Tribunal found that the applicants had a strong prima facie case for a complete waiver of pre-deposit. Consequently, the pre-deposit of dues was waived, and the recovery was stayed during the appeal's pendency. The stay petition was allowed.

Considering the significant amount of duty involved, the Registry was directed to list the matter for final hearing on a specified date. The judgment provided a detailed analysis of the relevant rules and provisions governing the credit for capital goods, ultimately leading to the decision in favor of the applicants for the waiver of pre-deposit and stay on recovery during the appeal process.