2014 (8) TMI 881 - AT - Central Excise

Waiver of predeposit of cenvat credit - written off of inputs / stock - shortage in stock - Held that - Demand has been confirmed on the ground that even though the credit had been availed on the inputs, but the same were not used in or in relation to the manufacture of finished goods. It is the submission of the ld. Advocate for the Applicant that the inputs were not removed from the factory and were lying inside the factory premises even if the same were written off from their books of accounts. Therefore, no cenvat credit is required to be reversed. It is the case of the Department that the applicant could not justify through evidences that even after writing off the inputs from their books of accounts, the same are still usable and available inthe factory. I find that the case rests onappreciation of evidences adduced by both sides. Prima-facie, the show-cause notice dated 4th May, 2007, had been issued relating to shortage of stock of inputs noticed in the premises of the Applicant. - stay granted partly.

Summary

Issues: Application for waiver of predeposit of cenvat credit and penalty imposed under Rule 11AC of the Central Excise Rules, 1944.

Analysis:
1. The Applicant sought waiver of predeposit of cenvat credit and penalty totaling &8377; 13.29 lakhs. The Advocate for the Applicant argued that there was an overlapping demand with a previous show-cause notice from 4.5.2007, which had already been adjudicated and confirmed. The current demand was based on recovery of cenvat credit on inputs allegedly written off or non-moving items, as per a cost audit report. The Advocate contended that the inputs were not removed from the factory, and credit was reversed when necessary. However, he acknowledged the need for evidence to support their claim.

2. The Department's representative countered that the 2007 show-cause notice was unrelated to the current demand. The Adjudicating Authority had already addressed the implications of both notices, finding the Applicant's claim regarding non-removal of written-off inputs unconvincing. The Department argued that the demand was valid as the Applicant failed to demonstrate the usability and availability of the inputs in the factory post write-off.

3. Upon review, the Tribunal noted that the demand was upheld on the basis that the availed credit on inputs was not utilized in manufacturing finished goods. The Applicant's defense centered on the inputs remaining within the factory premises despite being written off in accounts. The Department contended that the Applicant could not prove the continued usability of these inputs. The Tribunal recognized the need for evidence evaluation from both parties and observed that the 2007 show-cause notice related to input stock shortages. Due to the complexity and conflicting claims, the Tribunal directed the Applicant to deposit 25% of &8377; 10.00 lakhs within four weeks to maintain the balance dues waiver and stay recovery during the appeal process. Failure to comply would lead to appeal dismissal without further notice.