2013 (11) TMI 1125 - AT - Central Excise

Benefit of Procedures laid down in Rule 6(3) (i) or (ii) of cenvat credit rules, 2004 in the same financial year - Applicant contended that they have not exercised any option for availing the benefit under Sub-Rule (i), but paid 8%/10% of the price of the exempted goods due to non-availability of data, they cannot be precluded in exercising their option under Clause (ii) during the same financial year Held that - Ankit Packaging Ltd. Vs. Commr. of Central Excise, Hyderabad 2003 (12) TMI 86 - CESTAT, NEW DELHI - Prima facie, after availability of necessary data necessary to exercise option under clause (ii), the applicant, made an application on 29th of May, 2008 complying with the conditions prescribed under Sub-Rule 3A - Prima facie, mere discharging 10% of the price of the exempted goods due to non-availability of data at the beginning of the Financial year, would not disentitle them in exercising their option later during the same financial year under clause (ii) of Sub-Rule (3) of Rule 6 of Cenvat Credit Rules,2004 - the applicant could able to make out prima facie a case for total waiver of pre-deposit of dues - Thus pre-deposits waived till the disposal Stay granted.

Summary

Issues:
Waiver of pre-deposit of CENVAT Credit and penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Waiver of pre-deposit of CENVAT Credit and penalty
The case involved an application for waiver of pre-deposit of CENVAT Credit amounting to Rs.4.35 crores and an equal penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004. The applicant, engaged in manufacturing finished goods, faced challenges due to the emergence of exempted products during the manufacturing process. The applicant sought to exercise an option under Clause (ii) of Sub-Rule (3) of Rule 6 of Cenvat Credit Rules, 2004, to pay an amount equal to the CENVAT Credit attributable to inputs used in exempted finished goods. The Revenue contended that once the applicant paid a percentage of the price of exempted goods at the beginning of the financial year, they could not switch to Clause (ii) within the same year. However, the applicant argued that due to non-availability of data, they were unable to exercise the option initially and later applied following the required procedure under Sub-Rule 3A. The Tribunal, considering the Larger Bench's decision in a similar case, held that the applicant had a prima facie case for waiver of pre-deposit, allowing a total waiver of dues adjudged against them and staying the recovery during the appeal's pendency.

In conclusion, the Tribunal found that the applicant's inability to exercise the option initially due to data unavailability did not disentitle them from later opting for Clause (ii) of Sub-Rule (3) of Rule 6 of Cenvat Credit Rules, 2004. The Tribunal granted a total waiver of pre-deposit of dues adjudged against the applicant and stayed the recovery during the appeal process.