2013 (11) TMI 1171 - AT - Central Excise

Reversal of Cenvat credit on goods lost during storage Waiver of Pre-deposit - The Cenvat credit demand raised by the department is in respect of the quantity of molasses which was used in the manufacture of exempted final products rectified spirit, ENA and power alcohol, which were lost during storage Held that - The affidavit filed by the appellant in pursuance of the directions of the Tribunal clearly states that the appellant have already reversed the entire cenvat credit taken by them in respect of the quantity of molasses which was used in the manufacture of exempted final products including the exempted final products, which got evaporated or lost during storage - appellant have prima facie case in their favour - The requirement of pre-deposit of cenvat credit demand, interest and penalty waived till the disposal stay granted.

Summary

Issues:
Cenvat credit eligibility for molasses used in manufacturing exempted final products lost during storage.

Analysis:
The appellant, engaged in manufacturing sugar and molasses, faced cenvat credit demands due to storage losses of exempted final products like rectified spirit, ENA, and power alcohol. The department contended that cenvat credit should not be allowed for molasses used in manufacturing exempted final products lost during storage. The Asstt. Commissioner upheld the demands and penalties, which were affirmed by the Commissioner (Appeals), leading to the appeal.

The appellant argued that they had already reversed cenvat credit on the entire quantity of molasses used in manufacturing exempted final products, including those lost during storage. The appellant maintained that there was no basis for demanding cenvat credit again on the lost molasses. The Tribunal directed the appellant to file an affidavit supporting their claim, which was subsequently submitted.

In the affidavit, it was clarified that the appellant had indeed reversed the cenvat credit on the molasses used in manufacturing exempted final products that were lost during storage. The appellant's counsel emphasized this point to support the request for waiving the pre-deposit of the cenvat credit demand, interest, and penalties pending the appeal's disposal.

The Departmental Representative opposed the stay application, reiterating the Commissioner (Appeals)'s findings. However, after considering both parties' submissions and reviewing the records, the Tribunal found merit in the appellant's case. The Tribunal noted that the appellant had already reversed the cenvat credit on the molasses used in manufacturing exempted final products lost during storage. Consequently, the Tribunal waived the requirement for pre-deposit of the cenvat credit demand, interest, and penalties, allowing the stay application.