2014 (5) TMI 946 - AT - Central Excise

Waiver of pre-deposit - CENVAT Credit - credit availed on returned transformers by the applicants - Held that - Applicant is providing the standby transformer for the period of repair of the transformer sold to the customer. The transformer which was sent for a short period were cleared on payment of duty and after the repair, the transformer was cleared, the standby transformer comes back to the factory and on which the applicants are taking credit of the duty paid on the same - Considering the submissions made by the applicant and relying on the above cited judgment, the applicant has made out a case for 100% waiver of pre-deposit - stay granted.

Summary

Issues:
Waiver of pre-deposit of input credit availed on returned transformers.

Analysis:
The judgment deals with the issue of waiver of pre-deposit of input credit availed on returned transformers by the applicants. The applicants, who are manufacturers of transformers, faced a situation where transformers supplied to customers were returned for repairs. During the repair period, the applicants provided standby transformers and upon return of the repaired transformer, the standby transformer was taken back to the factory, and the duty paid on it was claimed as credit. The revenue contended that the standby transformer was not an input, and credit could not be claimed based on the applicant's invoice. The applicant, however, argued that Rule 16 of the CENVAT Credit Rules, 2002, allowed credit for finished goods without specifying the document for credit. The applicant relied on the decision in Supreme Industries Ltd. 2005 (189) ELT 453 and Bunty Foods (India) Pvt. Ltd. 2009 (240) ELT 306 to support their case.

The Tribunal, per Ashok Jindal, considered the submissions and the cited judgments. It was noted that Rule 16 did not specify the document for credit on finished goods. Relying on the precedents cited by the applicant, the Tribunal found merit in the applicant's case for 100% waiver of pre-deposit. Consequently, the Tribunal granted the waiver of the entire amount of duty, interest, and penalty, and stayed the recovery during the pendency of the appeal. The decision was made in favor of the applicant, providing relief in the form of the waiver sought in the matter of pre-deposit related to the input credit on returned transformers.