Unutilised CENVAT credit and limitation in excise disputes: prima facie case found, pre-deposit waived, recovery stayed.

Unutilised AED (T&TA) credit was held not to be added to the cost of production merely because it could not be used during the relevant period, since the credit had been validly taken and could become utilisable if duty were later imposed. In the same central excise dispute, the Tribunal noted that the availment of AED credit and the absence of AED on the final product were already known to the department, so wilful suppression was not prima facie shown and the extended limitation period did not appear available. On that basis, the appellant established a prima facie case and pre-deposit of duty, interest and penalty was waived with recovery stayed pending appeal.

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Issues: Whether waiver of pre-deposit was warranted in a central excise dispute involving inclusion of unutilised AED (T&TA) credit in the cost of production, and whether the demand appeared prima facie barred by limitation.

Analysis: The inputs had suffered BED, SED and AED (T&TA), and the appellant had availed credit of those duties. The department's case was that because no AED (T&TA) was payable on the final product, the unutilised AED credit had to be treated as part of the cost of production. The Tribunal held that mere inability to utilise the credit during the dispute period did not justify adding AED (T&TA) to the cost of the final product, since credit had in fact been taken and could become utilisable if duty were imposed in future. The Tribunal also noted that the availment of AED credit and the absence of AED on the final product were known to the department, so wilful suppression was not apparent and the extended period did not prima facie seem available.

Conclusion: The appellant had a prima facie case, the demand appeared time-barred, and pre-deposit of duty, interest and penalty was waived with recovery stayed pending disposal of the appeal.

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