2006 (4) TMI 289 - AT - Central Excise

Tribunal grants waiver & stay on recovery in Cenvat Credit case, citing Rule 6 interpretation

The Tribunal granted waiver of pre-deposit and stayed recovery pending appeal in a case involving disallowance of Cenvat Credit on inputs used for ... Stay/Dispensation of pre-deposit - Demand and penalty Application for waiver of pre-deposit of duty of Rs. 14,63,597/- and equivalent penalty arose from confirmation of duty by disallowing Cenvat credit on inputs used by a 100% EOU in manufacture of exempted goods. Show Cause Notice recorded that credit of duty paid on input received from a supplier at Aurangabad was taken; the Commissioner (Appeals) held credit not available since inputs were imported duty free. Relying on sub-rule (5) of Rule 6 of the Cenvat Credit Rules, 2002, the appellant contended the prohibition on taking Cenvat credit for inputs used in exempted goods 'will not apply to goods cleared for export under Bond in terms of 2002 Rules.' The appellate authority was silent on this argument. Tribunal held that the Commissioner(A)'s finding was prima facie incorrect and that, prima facie, 'there is no bar on availment of Cenvat Credit for the reason that the goods were exported under Bond.' Pre-deposit waived and recovery stayed pending appeal.