2015 (10) TMI 1957 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - Goods imported under advance license - Held that - Cenvat credit under Cenvat Credit Rules, 2004 is admissible to the recipient of the goods if the same are received under a duty paying document. It is the case of the Revenue that appellant was aware of the fact that no duty was paid with respect to the raw materials used in the manufacture of the finished goods received by the appellant - General Manager (Commercial) of the appellant specifically stated that the firm was not aware from which account DIPL (Unit-II) has paid the duty, whether PLA or Cenvat and that they have only received the duty paid invoices on the strength of which Cenvat credit was taken. Prima facie, appellant has made out a case for waiver of the confirmed dues and penalties as no evidence has been brought on record to the effect that there was an express knowledge on the part of the appellant regarding the inputs received being made out of duty free raw materials imported by DIPL (Unit-I). The relevant records are required to be seen in depth for arriving at a final conclusion which can be done only at the time of final hearing. It is accordingly ordered that there will be a stay on the recovery of the confirmed dues and penalties till the disposal of appeal. - Stay granted.

Summary

Issues: Stay application seeking to stay the operation of Order-in-Original disallowing Cenvat credit, interest, and penalty.

In this judgment, the appellant sought to stay the operation of an Order-in-Original disallowing Cenvat credit of Rs. 72,13,884 along with interest and imposing a penalty. The appellant argued that they were entitled to the credit as they were not aware that the goods purchased were duty-free. The appellant also contended that any duty demand for misuse of advance licensing conditions should be raised on the supplier. The respondent, however, defended the order, stating that the appellant was aware of the duty status of the raw materials received. The Tribunal noted that Cenvat credit is admissible if goods are received under a duty-paying document. The appellant claimed they were unaware that the goods were duty-free, as they sold raw materials on a high sea sale basis to the supplier's other unit. The Tribunal observed that the appellant's general manager stated they were not aware of the duty payment specifics and that evidence of express knowledge was lacking. Consequently, the Tribunal granted a stay on the recovery of dues and penalties until the final hearing, emphasizing the need to examine relevant records thoroughly before reaching a conclusion.

This judgment highlights the importance of establishing awareness of duty status for claiming Cenvat credit and the necessity of evidence to prove such awareness. It underscores the significance of detailed record examination in determining liability and the granting of stay on recovery pending a final decision.