CESTAT Mumbai: Pre-deposit Rs. 5 lakh within 8 weeks for capital goods credit appeal

The Appellate Tribunal CESTAT, Mumbai, directed the company to pre-deposit Rs. 5 lakhs within 8 weeks towards the disallowed credit on capital goods. Failure to comply would result in dismissal of the appeal. The tribunal found no strong prima facie case for a full waiver of pre-deposit. Upon compliance, further duty and penalty were waived, and recovery stayed pending the outcome. The compliance deadline was set for 1-7-2005.

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Issues: Disallowance of credit on capital goods, imposition of penalties, waiver of pre-deposit of duty.

The judgment by the Appellate Tribunal CESTAT, Mumbai, involved a case where the Commissioner of Central Excise & Customs disallowed credit on capital goods and imposed penalties on the company and its Dy. Manager. The disallowed credit amounted to Rs. 60,85,274. The Cenvat Credit Rules, 2001, allow an assessee to take 50% of the duty paid on capital goods as credit upon receipt of goods, with the balance credit in subsequent financial years when the goods are in possession and use for manufacturing final products. The applicants claimed that part of the machinery worth Rs. 20 lakhs was installed in 2001-2002, justifying the credit taken. The Tribunal noted that when the balance credit was taken, the machine was not fully installed, and the issue of partial installation would be examined during the appeal. The Tribunal directed the company to pre-deposit Rs. 5 lakhs towards the disallowed credit within 8 weeks, failing which the appeal would be dismissed. Compliance was ordered by a specific date.

The Tribunal found that the applicants did not establish a strong prima facie case for a full waiver of pre-deposit of duty. Therefore, they were directed to pre-deposit Rs. 5 lakhs towards the disallowed credit within 8 weeks. Upon this deposit, further duty and penalty were waived, and recovery was stayed pending the outcome. Failure to comply with the pre-deposit directive would lead to the dismissal of the appellant-company's appeal. The compliance deadline was set for 1-7-2005. The judgment was delivered by Moheb Ali M., Member (T), and the compliance deadline was specifically dictated in the court.

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