2014 (1) TMI 726 - AT - Central Excise

Classification of Aloe Vera powder and Aloe Vera juice Waiver of pre-deposit Held that - The classification dispute to be highly debatable - a substantial claim for CENVAT credit raised by the assessee was not considered by the Commissioner - the appellant directed to pre-deposit an amount of Rupees twenty lakhs as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Waiver of predeposit and stay of recovery sought by the appellant.
2. Classification dispute regarding Aloe Vera powder and Aloe Vera juice.
3. Claim for CENVAT credit on capital goods and inputs.
4. Financial hardships pleaded by the appellant.

Analysis:
1. The appellant filed an application seeking waiver of predeposit and stay of recovery for the adjudged dues totaling over Rs.1.83 crores, including a demand of Rs.1,23,72,885/- related to the classification dispute of Aloe Vera powder and Aloe Vera juice. The Tribunal found the classification dispute to be highly debatable and time-consuming. Additionally, the appellant claimed CENVAT credit on capital goods and inputs amounting to Rs.98.93 lakhs, which was not considered by the Commissioner. The Tribunal estimated a recoverable amount of Rs.25 lakhs on the products, directing the appellant to predeposit Rs.20 lakhs within six weeks due to financial hardships.

2. The dispute revolved around the classification of Aloe Vera powder and Aloe Vera juice, with the Department classifying them under SH 1302 19 19 and the assessee contending they should be classified under SH 20 09 80 90. The Tribunal acknowledged the debatable nature of the classification dispute and the need for a thorough examination. The Tribunal noted the substantial CENVAT credit claim made by the assessee, which was not addressed by the adjudicating authority, indicating a potential impact on the final liability.

3. The appellant's claim for CENVAT credit on capital goods and inputs totaling Rs.98.93 lakhs was a significant aspect of the case. Despite the substantial claim, the adjudicating authority did not address this issue in the impugned order. The Tribunal recognized the importance of considering this claim in determining the final liability of the appellant, highlighting the need for a comprehensive review of all relevant factors before reaching a decision.

4. Financial hardships were pleaded by the appellant, emphasizing the challenges they faced in meeting the demanded predeposit amount. Considering the appellant's plea and the potential impact of the unresolved CENVAT credit claim on their financial obligations, the Tribunal directed the appellant to predeposit a reduced amount of Rs.20 lakhs within a specified timeframe. The Tribunal balanced the interests of the appellant with the need for compliance, providing a temporary waiver and stay subject to the appellant's due diligence in meeting the directed predeposit requirement.