Appellate Tribunal grants relief by waiving pre-deposit for denied Cenvat Credit, ensuring revenue neutrality

AMUL INDUSTRIES PVT. LTD. Versus COMMISSIONER OF C. EX., RAJKOT

AMUL INDUSTRIES PVT. LTD. Versus COMMISSIONER OF C. EX., RAJKOT - 2006 (206) E.L.T. 416 (Tri. - Mumbai) Issues:
Prayer for dispensing with the condition of pre-deposit of duty amount. Denial of Cenvat Credit on the ground of premises not being considered as a factory.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai involved a prayer for dispensing with the pre-deposit of duty amount of Rs. 3,23,46,680/- due to the denial of Cenvat Credit on the grounds that the premises of the appellant were not considered a factory. The appellant, a registered unit with the Central Excise Department, paid duty on their final product utilizing Modvat credit. The impugned order did not address the duty paid by the appellant. The Tribunal noted that if the credit denied was offset against the duty paid, the situation would be revenue neutral. Referring to a Supreme Court decision, the Tribunal found that the appellant had made a prima facie case in their favor, allowing the stay petition unconditionally and fixing the main appeal for final disposal on a specific date.

In the present case, the primary issue revolved around the denial of Cenvat Credit to the appellant on the grounds that their premises were not considered a factory. The appellant had paid duty on their final product using Modvat credit, which exceeded the credit availed. The Tribunal observed that the impugned order did not address the duty paid by the appellant, leading to a situation where offsetting the denied credit against the duty paid would result in revenue neutrality. By referencing a relevant Supreme Court decision, the Tribunal concluded that the appellant had established a prima facie case in their favor, warranting the unconditional allowance of the stay petition.

The judgment highlighted the importance of considering the duty paid by the appellant in conjunction with the denied Cenvat Credit to ensure a revenue-neutral outcome. By emphasizing the need for a balanced approach in such cases, the Tribunal acknowledged the appellant's compliance with duty payment obligations and the significance of addressing the specific circumstances of the case. The decision to allow the stay petition unconditionally reflected the Tribunal's recognition of the appellant's prima facie case and the necessity to ensure fairness and equity in the adjudication process.