2013 (2) TMI 312 - AT - Central Excise

Waiver of pre-deposit, interest and duty - Whether Cenvat Credit can be denied on the ground that the activity undertaken does not amount to manufacture, inspite of duty on final product accepted by the revenue - Manufacture - Denial of CENVAT Credit - Cutting and slitting of stainless steel coil - Rule 14 of the Cenvat Credit Rules, 2004 - Section 5 B of the Central Excise Act, 1944 - Assessee had paid the duty after reversing the credit and from PLA - Held that - Prima facie the applicant had a strong case, in view of the decision in the case of Ajinkya Enterprises (2012 (7) TMI 141 - BOMBAY HIGH COURT) relied upon by the assessee, waive the pre-deposit of duty, interest and penalty and recovery thereon stayed during the pendency of the appeal. Waive the pre-deposit of duty, interest and penalty. Stay application allowed.

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty based on the denial of credit for cutting and slitting of stainless steel coil activity.

Analysis:
The applicant sought a waiver of pre-deposit of duty, interest, and penalty amounting to Rs.65,46,44,293/-, as the demand was confirmed by denying credit for the cutting and slitting of stainless steel coil activity, contending that it does not constitute manufacturing. The applicant argued that they reversed credit and paid from PLA while clearing goods, having paid Rs.35,96,460/- through PLA during the disputed period. The appellant referenced a Bombay High Court decision stating that if the duty of final production is accepted by the Revenue, Cenvat Credit cannot be denied based on the activity not amounting to manufacture.

The revenue, on the other hand, relied on Rule 14 of the Cenvat Credit Rules and Section 5 B of the Central Excise Act, 1944 to support the denial of credit. The tribunal noted that credit was being denied to the applicant on the grounds that the activity undertaken did not amount to manufacture, even though the duty was paid after reversing the credit and from PLA. Considering the strong case presented by the applicant, supported by the Bombay High Court decision, the tribunal waived the pre-deposit of duty, interest, and penalty, and stayed the recovery during the appeal process, allowing the stay application.

In conclusion, the tribunal granted the waiver of pre-deposit of duty, interest, and penalty to the applicant, based on the argument that the cutting and slitting activity of stainless steel coil should not result in the denial of credit if the duty of final production is acknowledged. The decision was influenced by the interpretation of relevant legal provisions and a previous high court ruling, leading to the stay of recovery pending the appeal process.