2002 (2) TMI 537 - AT - Central Excise

Appellate Tribunal Grants Stay on Duty & Penalty for Input Credit Dispute

The Appellate Tribunal CEGAT, Mumbai granted a stay on the recovery of duty and penalty imposed on the assessee for taking credit on inputs used in ... Manufacturer's right to pay duty despite statutory exemption - entitlement to MODVAT/Modvat credit on inputs where duty is voluntarily paid - stay of recovery by waiver of deposit and penaltyManufacturer's right to pay duty despite statutory exemption - entitlement to MODVAT/Modvat credit on inputs where duty is voluntarily paid - Whether, notwithstanding an unconditional exemption of the finished goods, a manufacturer is prima facie entitled to pay duty on the finished product and claim Modvat credit on inputs - HELD THAT: - The Tribunal applied its earlier decision in Everest Converters v. CCE, holding that even though the final products were unconditionally exempted by notification, a manufacturer could choose to pay duty on the finished products and, having so paid, claim Modvat credit on the duty-paid inputs. The present appellants' case is prima facie covered by that precedent, and the Court treated the issue as governed by the Tribunal's earlier ruling without deciding the correctness of that precedent on merits. [Paras 2]Prima facie covered by Everest Converters; manufacturer entitled to pay duty and claim Modvat credit, pending full hearingStay of recovery by waiver of deposit and penalty - Whether recovery of the duty and penalty demanded should be stayed pending disposal of the appeals - HELD THAT: - Noting the prima facie applicability of the Tribunal's earlier decision, the Court waived the deposit requirement and stayed recovery of the duty and the penalty imposed in the impugned orders. The stay was granted as an interim protective measure until the appeals are finally heard. [Paras 2]Recovery of the demanded duty and imposed penalty waived and stayed pending final disposal of the appealsAdministrative listing for early hearing due to recurring issue - Listing of the appeals for early hearing and consideration of departmental request to reconsider the precedent - HELD THAT: - The departmental representative invited reconsideration of the Tribunal's Everest Converters decision and sought urgent hearing because the issue is recurring. In response the Court directed that the appeals be listed for hearing on 18-3-2002 so that the correctness of the precedent can be addressed at the final hearing. [Paras 3]Appeals listed for hearing on 18-3-2002 for final disposal, including consideration of the request to reconsider the precedentFinal Conclusion: The Tribunal granted an interim stay by waiving deposit and staying recovery of the demanded duty and penalties, treated the case as prima facie covered by Everest Converters entitling the manufacturer to pay duty and claim Modvat credit, and directed that the appeals be listed for final hearing on 18-3-2002 to consider the recurring issue. The Appellate Tribunal CEGAT, Mumbai ordered a stay on the recovery of duty and penalty totaling Rs. 25.25 lakhs and Rs. 5.20 lakhs respectively, imposed on the assessee for taking credit on inputs used in manufacturing final products exempted by a notification. The Tribunal cited a previous decision allowing duty payment on exempted goods for claiming Modvat credit. The appeals are listed for hearing on 18-3-2002, considering the recurring issue.