2013 (8) TMI 2 - AT - Central Excise

Cenvat credit on the inputs and the capital goods which were used in Research and Development works Relying upon the judgment of the Hon ble High Court of Bombay in the case of Tata Engineering Locomotive Company Limited vs. CCE, Pune 2010 (2) TMI 601 - BOMBAY HIGH COURT and also because appellant is unable to justify his claim that these inputs were used in relation to manufacture, held that appellant has not made out a case for prima facie use of such materials Directed to make pre-deposit of Rs.50,000/- (Rupees fifty thousand only) within a period of four weeks.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of confirmed duty, interest, and penalty.
2. Availing ineligible cenvat credit on inputs and capital goods used in Research and Development works.
3. Dispute regarding capital goods credit for Injection Moulding Machine.
4. Demand on inputs consumed in Research and Development and quality control.

Analysis:
1. The appellant filed a stay petition seeking the waiver of pre-deposit of an amount confirmed as duty, interest, and penalty. Both the adjudicating authority and the first appellate authority upheld the demands due to the appellant availing ineligible cenvat credit on inputs and capital goods used in Research and Development works.

2. The Tribunal examined the dispute concerning the capital goods credit for an Injection Moulding Machine. The machine was used by the appellant in their factory premises for testing plastic granule samples, which are the final product. The Tribunal found that the machine was essential for quality control and conforming to standards, falling within the definition of capital goods. Citing a judgment from the Hon'ble High Court of Bombay, the Tribunal opined that the credit for the machine should be allowed. However, regarding the demand on inputs used in Research and Development, the Tribunal noted the lack of evidence to support the claim at present.

3. Based on the above assessment, the Tribunal directed the appellant to pre-deposit a specific amount within a stipulated period. The appellant was required to report compliance by a specified date, following which the application for the waiver of pre-deposit for the remaining amounts would be considered. Recovery of the balance amounts was stayed pending the appeal's disposal, subject to the appellant's compliance with the pre-deposit directive.

4. The judgment was dictated and pronounced in court, outlining the decision on the stay petition and the directions regarding the pre-deposit requirement, compliance reporting, and the stay on recovery pending appeal disposal. The Tribunal's analysis focused on the eligibility of cenvat credit for the capital goods and the lack of justification for the inputs used in Research and Development activities, leading to the specified pre-deposit directive for the appellant.