2013 (11) TMI 439 - AT - Central Excise

Cenvat credit Excess use in Manufacture Difference in scrap - Waiver of Pre-deposit - During the period the appellant showed the excess use of pig iron in the manufacture of their final product Held that - The value difference in the scrap in the hands of the manufacturer and in the hands of the dealer was on account of various processes adopted by the in between persons - The issue is contentious and arguable - Lot of evidences are required to be gone through the report of NIT, Raipur procured by the Revenue and as also by the appellant is required to be examined and scrutinized - keeping in view financial condition of the applicant the applicant directed to deposit an amount of Rs.25.00 Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
Confirmation of duty and penalty imposition against the applicant for excess use of pig iron in manufacturing, conflicting expert reports on the practicality of pig iron usage, financial condition of the applicant affecting the pre-deposit amount.

Analysis:
The judgment addressed the confirmation of duty amounting to approximately Rs.5.53 Crores and an equivalent penalty against the applicant for the alleged excess use of pig iron in their manufacturing process. The applicant, engaged in manufacturing various products, was accused of showing impracticable usage of pig iron, leading to the investigation by the Revenue. The investigation revealed discrepancies in the extent of pig iron usage, prompting reliance on a report from NIT, Raipur to support the Revenue's claims.

The appellant contested the allegations by presenting a contradictory report from the same expert consulted by the Revenue, asserting the practicality and possibility of the claimed pig iron usage. They explained a shift from using scrap to pig iron due to discrepancies in scrap valuation between manufacturers and dealers, resulting in increased pig iron usage and cenvat credit utilization. The conflicting expert opinions and the complex nature of the manufacturing process raised contention and the need for thorough examination of evidence.

During the proceedings, the appellant's financial status emerged as a crucial factor, with the applicant being a small-scale industry showing minimal profits. The appellant proposed a 5% pre-deposit of the duty amount for the appeal to proceed, while the Revenue sought a higher deposit of 10%. Considering the financial constraints of the applicant, the Tribunal directed a pre-deposit of Rs.25.00 Lakhs within 8 weeks, with the balance amount waived and recovery stayed during the appeal's pendency. The compliance reporting was scheduled for a later date to monitor the pre-deposit fulfillment and subsequent proceedings.