2013 (12) TMI 874 - AT - Central Excise

Credit taken on duty paid on intermediate product - Waiver of pre-deposit of duty Held that - The applicants have paid duty on the intermediate product used in the manufacture of final product and they have paid duty while clearing these new products to their other units Following Mahindra and Mahindra Ltd. vs. CCE Mumbai 2010 (12) TMI 403 - BOMBAY HIGH COURT - if the duty illegally paid and once the same has not been refunded they cannot be denied the CENVAT credit - the applicants are able to make out a prima facie case for waiver of pre-deposit of amount pre-deposits waived till the disposal Stay granted.

Summary

Issues:
- Application for waiver of pre-deposit of duty and penalty under Section 11AC of Central Excise Act, 1944.

Analysis:
The case involves an application for waiver of pre-deposit of duty amounting to Rs. 8,59,714/- and an equivalent penalty imposed under Section 11AC of the Central Excise Act, 1944. The dispute arose from the appellant availing CENVAT credit on intermediate products like CPS-DFA, CPS-Low Volatile, CPS-Pitch Oil, and CPS-Glycerin. These products were either used captively for manufacturing soaps and detergents or cleared to another company. The department objected to the credit availed by the appellant, arguing that certain intermediate products were not inputs for the final products manufactured by the appellant. The lower authorities upheld the demand and imposed penalties.

The applicant contended that they had paid duty on all intermediate products used in manufacturing final products or cleared to other units, and they had never availed CENVAT credit on products for which duty was paid. On the other hand, the department argued that the appellant was taking credit on inputs used in manufacturing intermediate products, some of which were used for non-manufacturing purposes. The appellant, in response, emphasized that they paid duty on all goods, whether used in their factory or by other units, and cited a relevant judgment from the Bombay High Court.

The Tribunal noted that the appellant had indeed paid duty on the intermediate products and subsequently availed credit for the same. Referring to the precedent set by the Bombay High Court, it was established that even if duty was paid incorrectly or unlawfully, as long as it was not refunded, the appellant could not be denied CENVAT credit. Consequently, the Tribunal found that the appellant had made a prima facie case for the waiver of pre-deposit of dues adjudged against them. Therefore, the requirement for pre-deposit was waived, and the recovery of dues was stayed during the appeal process.

In conclusion, the Tribunal allowed the stay petition, granting relief to the appellant in the matter of pre-deposit of duty and penalty, based on the legal principles and arguments presented during the proceedings.