2015 (4) TMI 1022 - AT - Central Excise

Waiver of Pre-deposit Requirement for Appeal Hearing

The CESTAT Mumbai waived the requirement for the appellant to make a pre-deposit of duty demand, interest, and penalty for the appeal hearing. This ... Waiver of pre deposit - valuation - captive consumption at different units - Duty on the basis of 110% of the cost of production in terms of Rule 8 of the Central Excise Valuation Rules - Held that:- The appellant in their Badli Unit manufacture sheet metal components for various car manufacturers including MUL, and the component are cleared by them to Manesar Unit and Greater Noida Unit of the same appellant company where the components are tested and packed and thereafter are cleared to car manufacturers on payment of duty. Prima facie, we find that even if the provisions of Rule 8 of the Central Excise valuation Rules are applicable and the appellant unit at Badli is required to pay the differential duty, the Manesar Unit and Greater Unit of the same appellant company would eligible for its cenvat credit and as such, it would be the Revenue neutral situation in respect of which the apex court judgment in the case of CCE Pune vs Coca Cola India (P) Ltd. reported in [2007 (4) TMI 17 - SUPREME COURT OF INDIA] would be applicable. The appellant, therefore, have prima facie case in their favour. - Stay granted. Issues:- Duty demand on the basis of Central Excise Valuation Rules- Settlement of audit objection and duty demand confirmation- Revenue neutrality and cenvat credit availability- Stay application for pre-deposit of duty demand, interest, and penaltyAnalysis:Issue 1: Duty demand on the basis of Central Excise Valuation RulesThe case involved the appellant's factory in Delhi manufacturing sheet metal components for automobiles, supplied to their units at Manesar and Greater Noida, which then supplied to car manufacturers. The Department demanded duty payment based on 110% of the cost of production under Rule 8 of the Central Excise Valuation Rules. The Additional Commissioner confirmed the duty demand, leading to an appeal to the Commissioner (Appeals) and subsequently to the CESTAT Mumbai.Issue 2: Settlement of audit objection and duty demand confirmationThe appellant argued that the duty demand was based on an audit objection by the CAG audit party, which had been settled as per correspondence between the Department and CAG's office. They contended that since the audit objection was resolved, there was no justification for confirming the duty demand. The appellant cited legal precedents to support their claim for waiver of pre-deposit of duty demand, interest, and penalty.Issue 3: Revenue neutrality and cenvat credit availabilityThe appellant highlighted revenue neutrality, stating that any duty paid by their unit would be available as cenvat credit to the Manesar and Greater Noida Units of the same company. They relied on the Supreme Court and Tribunal judgments to support their argument that the duty demand should be waived due to the availability of cenvat credit, ensuring a revenue-neutral situation.Issue 4: Stay application for pre-deposit of duty demand, interest, and penaltyAfter hearing both parties and examining the records, the CESTAT Mumbai found that the appellant had a prima facie case in their favor. Considering the revenue-neutral situation and the availability of cenvat credit to other units of the company, the requirement for pre-deposit of duty demand, interest, and penalty was waived for the appeal hearing. The recovery of the amount was stayed pending the appeal process.This detailed analysis of the judgment showcases the key issues raised, arguments presented, legal precedents cited, and the final decision by the CESTAT Mumbai regarding the duty demand and stay application in the case.