2013 (7) TMI 215 - AT - Central Excise

Tribunal grants stay, waives duty & penalty for Silico Manganese manufacturer in processing case

The Tribunal granted the appellant's stay application, waiving the pre-deposit of duty and penalty totaling Rs.96,27,875. The appellant, engaged in Silico ... Stay Application – Waiver of pre-deposit - processes of grinding, sizing and packing to semi-finished Silico Manganese – Applicant received a huge order and the factory was not capable of carrying out the entire processes - On the finished Silico Manganese they had paid duty which has been duly accepted by the department – Held that:- Once the duty was duly discharged and accepted by the department, CENVAT Credit cannot be denied on the input Silico Manganese The decision of the Tribunal in the instant case gets support from the decisions in cases Commissioner of Central Ex. & Cus., Surat-III vs. Creative Enterprises [2008 (7) TMI 311 - GUJARAT HIGH COURT], followed by the Mumbai Bench of this Tribunal in the case of Brom Chem (India) Pvt. Ltd. vs. CCE, Belapur and also the judgement of Hon'ble Delhi High Court in the case of A One Laminators Pvt. Ltd. vs. CCE[2011 (7) TMI 24 - DELHI HIGH COURT] - Applicant has been able to make out a prima facie case for total waiver of pre-deposit of duty and penalty - The pre-deposit of duty and penalty is waived and recovery thereof is stayed during pendency of the appeal. Stay application allowed. - Decided in favor of Assessee. Issues:Waiver of pre-deposit of duty and penalty under rule 15(2) of CENVAT Credit Rules, read with section 11AC of the Central Excise Act, 1944.Analysis:The case involved an application for the waiver of pre-deposit of Rs.96,27,875 and an equivalent penalty imposed under the relevant rules. The appellants were engaged in the manufacture of Silico Manganese and had received the material in an unprocessed form, subsequently carrying out grinding, sizing, and packing activities. The Revenue contended that these processes did not amount to manufacturing, thus challenging the admissibility of CENVAT Credit on the input material. The appellant argued that they processed the material to a semi-finished stage due to a large order and that duty was paid on the finished product, which was accepted by the department. They cited legal precedents to support their position.The Advocate for the appellant referenced judgments from the Hon'ble Gujarat High Court and the Hon'ble Delhi High Court to argue that since duty was paid on the finished product and accepted by the department, CENVAT Credit on the input material should not be denied. The Revenue, however, maintained that the processes undertaken did not amount to manufacturing as per the Central Excise Act, thus challenging the admissibility of the credit. After hearing both sides and examining the record, the Tribunal noted that the input material had indeed undergone processing before being cleared after payment of duty. Citing precedents where similar circumstances led to the waiver of pre-deposit, the Tribunal found that the appellant had established a prima facie case for the total waiver of pre-deposit of duty and penalty. Consequently, the pre-deposit of duty and penalty was waived, and the recovery stayed during the pendency of the appeal.In conclusion, the Tribunal granted the stay application, allowing the waiver of pre-deposit of duty and penalty, based on the appellant's ability to establish a prima facie case supported by legal precedents and the processing of the input material before clearance of the finished goods.