2014 (10) TMI 635 - AT - Central Excise

Classification of the product Cheeselings - appellant classified the same as ready to eat packaged foods not falling under the category of Namkeen - Penalty under Rule 25 of the CER, 2002 - CENVAT Credit - Held that - appellant is not allowed to take the CENVAT credit, they are required to discharge duty @2% ad valorem and the duty liability would be approx ₹ 25.46 lakhs. If the appellant is allowed to take the CENVAT credit, the duty liability would be 6% ad valorem and the appellant would be eligible take CENVAT credit of ₹ 56 lakhs then the duty liability would be approx. ₹ 23.46 lakhs - partial stay granted.

Summary

Issues: Duty demand classification, CENVAT credit eligibility, penalty imposition

Duty Demand Classification:
The appeal challenges the duty demand of &8377; 81,23,300 imposed by the CCE, Mumbai I on the appellant for the period January 2012 to December 2012. The adjudicating authority classified the product "Cheeselings" as ready-to-eat packaged foods not falling under the category of "Namkeen." The appellant contests this classification and seeks relief based on a previous Tribunal order suggesting the debatable nature of the product categorization as "Namkeen." The appellant argues for a similar pre-deposit arrangement as in the previous case, highlighting the potential CENVAT credit entitlement to offset the duty liability.

CENVAT Credit Eligibility:
The appellant's counsel contends that disallowing CENVAT credit would result in a duty liability of approximately &8377; 25.46 lakhs at a rate of 2% ad valorem. Conversely, if CENVAT credit is permitted, the duty liability would be around &8377; 23.46 lakhs at a 6% ad valorem rate, with the appellant eligible to claim a credit of &8377; 56 lakhs. The argument emphasizes the financial impact of CENVAT credit availability on the appellant's duty liability.

Penalty Imposition:
In response to the submissions and considering a prior decision, the Tribunal directs the appellant to make a pre-deposit of &8377; 24 lakhs within six weeks. Upon compliance by a specified date, the balance amount of dues adjudged against the appellant would be waived, and recovery thereof stayed during the appeal's pendency. This decision outlines the procedural requirement for the appellant to secure relief from the imposed duty demand and associated penalty under Rule 25 of the CER, 2002.

This judgment addresses the core issues of duty demand classification, CENVAT credit eligibility, and penalty imposition, providing a detailed analysis of the appellant's contentions, prior Tribunal decisions, and the financial implications of CENVAT credit availability. The Tribunal's directive on pre-deposit and stay of recovery pending appeal signifies a procedural step towards resolving the dispute and ensuring compliance with the duty obligations.