2013 (12) TMI 1287 - AT - Central Excise

Credit on calcium silica boards, anchors, electrodes availed - Goods to be treated as capital goods or finished goods Waiver of Pre-deposit Held that - The items were cleared with the final product for using them in the kiln/furnace - they have paid duty when these goods were cleared as finished goods - There is no dispute about payment of duty on these items Following Ashok Enterprises Vs Commissioner of Central Excise, Chennai 2007 (11) TMI 67 - CESTAT, CHENNAI - assessee has made out a prima facie case for full waiver of the pre-deposit of duty, interest and penalty in their favour Pre-deposits waived till the disposal Stay granted.

Summary

Issues: Alleged wrongful availing of CENVAT credit on certain items not considered inputs or capital goods. Demand for CENVAT credit, interest, and penalty under relevant provisions.

In this judgment by the Appellate Tribunal CESTAT Chennai, the applicant, engaged in manufacturing Refractory Castables and High Temperature Bricks, faced allegations of wrongly availing and utilizing CENVAT credit on items like calcium silica boards, anchors, and electrodes, which were deemed not to be inputs or capital goods used in the finished products. The demand amounted to Rs.36,79,416/- under Section 11A(1) of the Central Excise Act, 1944, along with interest under Section 11AB and a penalty of Rs.10 lakhs under Rule 15(2) of the CENVAT Credit Rules, 2004.

The counsel for the applicant argued that the items in question were essential for the installation of kilns/furnaces to conserve energy, constituting a vital part of the manufactured goods. It was contended that since duty was paid on the finished goods at the time of clearance, the applicant was entitled to avail credit on the inputs. Reference was made to judgments from the Hon'ble Punjab and Haryana High Court and the Tribunal in support of this argument.

On the other hand, the authorized representative for the Revenue contended that as per the definition in Section 2(l), inputs should be used directly or indirectly in the manufacture of the final product, which was not the case with the disputed items supplied along with the final product. Therefore, the applicant was deemed ineligible to claim credit on these items.

After considering the arguments from both sides, the Tribunal observed that the items in question were cleared along with the final product for use in kilns/furnaces, with duty duly paid upon clearance as finished goods. Noting the absence of dispute regarding the duty payment and the applicability of cited precedents, the Tribunal concluded that the applicant had established a prima facie case warranting a full waiver of the pre-deposit of duty, interest, and penalty. Consequently, the pre-deposit of the adjudged dues was waived, and the recovery thereof stayed pending the appeal's disposal. The stay application was allowed, and the operative part of the order was pronounced in open court.