Tribunal waives pre-deposit on duty demand, interest & penalty for consistent excise duty payment.

The Tribunal allowed the waiver of the pre-deposit condition of the duty demand, interest, and penalty in favor of the appellant. The decision was based on the consistent payment of excise duty on the final product, which had been accepted by the Department. The Tribunal held that if duty had been collected on the final product, Cenvat credit had to be allowed and could not be subsequently denied on the grounds that the process did not amount to manufacture.

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Issues: Application for waiver of pre-deposit of duty demand.

Analysis:
1. The appellant sought a waiver of the pre-deposit condition of the duty demand of Rs. 10,51,06,739/- with interest and an equal amount of penalty as a pre-condition of hearing the appeal.
2. The appellant, engaged in the manufacture of biscuits, produced printed laminated wrappers in their factory. These wrappers were used both captively and cleared to contract manufacturing units on payment of excise duty, with Cenvat credit being availed on the inputs used for the printed laminated sheets.
3. The department contended that as per the judgment in Metlex (I) Pvt. Ltd. v. CCE, New Delhi, no excise duty was payable on the printed wrappers as the process of printing and laminating a plain polyester film did not amount to manufacture. Consequently, a show cause notice was issued seeking recovery of Cenvat credit availed on inputs used in making printed laminated sheets.
4. The appellant argued that they had consistently paid excise duty on the laminated wrappers cleared to contract manufacturing units, with duty paid exceeding the Cenvat credit availed. The appellant contended that even if lamination was not considered as manufacture, there was no justification for recovering Cenvat credit when duty had been paid on the laminated sheets.
5. The advocate for the appellant urged the waiver of the pre-deposit condition, emphasizing a strong prima facie case. In contrast, the Revenue's representative opposed the stay application, supporting the Commissioner's decision to disallow the Cenvat credit.
6. The Tribunal found merit in the appellant's arguments, noting that the goods in question were cleared by the appellant on payment of excise duty, which had been consistently accepted by the Department. Citing precedent, the Tribunal held that if duty had been collected on the final product, Cenvat credit had to be allowed and could not be subsequently denied on the grounds that the process did not amount to manufacture. Consequently, the Tribunal allowed the stay application, waiving the pre-deposit condition of duty demand, interest, and penalty.

Conclusion:
The Tribunal, considering the facts and legal precedents, allowed the waiver of the pre-deposit condition of the duty demand, interest, and penalty, finding in favor of the appellant due to the revenue-neutral nature of the excise duty paid on the final product and the acceptance of duty payments by the Department without protest.

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