2008 (5) TMI 502 - AT - Central Excise

Tribunal grants waiver on Cenvat credit reversal, highlights time limitation and importance of out-of-turn hearing.

The Tribunal considered the reversal of Cenvat credit availed by the applicant on duty paid on chassis, focusing on Rule 3, explanation, and Notification ... Stay/Dispensation of pre-deposit - Cenvat/Modvat Issues involved:1. Reversal of Cenvat credit availed by the applicant on duty paid on chassis.2. Interpretation of Rule 3, explanation, and Notification No. 6/2002 regarding Cenvat credit eligibility.3. Applicability of condition No. 53 under Serial No. 214 of Notification No. 6/2002.4. Time limitation for the demand of Cenvat credit availed by the applicant.5. Granting waiver of pre-deposit of the amounts involved.Detailed Analysis:1. The primary issue in this case revolves around the reversal of the Cenvat credit availed by the applicant on the duty paid on chassis. The applicant availed credit on the duty paid on the chassis and built body, clearing the same by paying full duty. The contention arises from the show cause notice alleging that the applicant is disentitled to avail Cenvat credit due to an explanation added to Rule 3 of the Cenvat Credit Rules, 2002, and continued Cenvat Credit Rules, 2004. The adjudicating authority confirmed the duty, leading to the appeal.2. The interpretation of Rule 3, the explanation, and Notification No. 6/2002 is crucial in determining the eligibility of the applicant for Cenvat credit. The applicant's counsel argued that the conditions under heading 214 of the notification do not apply to them as they have availed duty paid credit on inputs and capital goods, not on chassis. The counsel highlighted that the condition specified in entry No. 214 does not align with the applicant's situation, emphasizing the issue of non-fulfillment of conditions for disallowance under the notification.3. Condition No. 53 under Serial No. 214 of Notification No. 6/2002 plays a significant role in the case. The condition specifies that the assessee availing credit on chassis will fall under Serial No. 214. However, the applicability of this condition to an assessee availing credit on inputs and capital goods requires detailed examination. The Tribunal noted that it is not conclusively proven that the explanation to Rule 3 applies in this case, indicating the need for an in-depth interpretation of the statute.4. The aspect of time limitation regarding the demand for Cenvat credit availed by the applicant was also raised. The applicant's counsel argued that the demand was substantially time-barred, citing communication to the revenue authorities in March 2004 regarding the Cenvat credit availed. The counsel emphasized that the revenue was aware of the credit availed by the applicant on chassis and other inputs, suggesting a limitation on the demand.5. Lastly, the Tribunal considered the submissions from both sides and examined the records to grant the waiver of pre-deposit of the amounts involved. Given the general importance of the issue and its potential impact on the entire trade, the Tribunal allowed the application for waiver and stayed the recovery until the appeal's disposal. The case was deemed significant for out-of-turn hearing, scheduled for a specific date to address the matter promptly.