Tribunal orders pre-deposit in shoe manufacturing case

The Tribunal directed the Appellants, engaged in shoe manufacturing, to make a pre-deposit of 25% of the duty confirmed under Section 11AC read with rule 15 of CENVAT Credit Rules, 2004. The Appellants failed to establish the payment of sales tax as claimed, leading to the disallowance of deduction of sales tax in computing 10% of the price under Rule 6(3)(b) of CENVAT Credit Rules, 2004. The Tribunal allowed deduction of a certain amount already deposited by the Appellants, with the remaining balance to be deposited within six weeks. Recovery was stayed during the appeal's pendency.

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Issues:
- Application seeking waiver of pre-deposit of duty amount and penalty under Section 11AC read with rule 15 of CENVAT Credit Rules, 2004.
- Disallowance of deduction of sales tax in computing 10% of the price under Rule 6(3)(b) of CENVAT Credit Rules, 2004.
- Requirement of pre-deposit of 25% of the duty confirmed.

Analysis:
1. The application sought a waiver of pre-deposit of duty amount and equal penalty imposed under Section 11AC read with rule 15 of CENVAT Credit Rules, 2004. The Appellants, engaged in shoe manufacturing, availed Cenvat Credit on inputs used in the manufacture of shoes. The issue arose when certain shoes, not meeting quality standards, were sold below the excise duty chargeable price, thus cleared as exempted goods. The contention was regarding the deduction of sales tax in computing 10% of the price under Rule 6(3)(b) of CENVAT Credit Rules, 2004. The department disallowed the deduction, stating the Appellant failed to provide evidence of payment of sales tax @ 8%.

2. The Ld. Sr. Advocate argued that since the goods were sold from depots, not at the factory gate, the conditions of the sub-rule were not met. Referring to the Ballarpur Industries case, it was contended that the principle laid down by the Hon'ble Supreme Court should apply. The Ld. A.R. for the Revenue supported the findings of the Ld. Commissioner(Appeals), emphasizing that since the goods were cleared from the factory for sale from the depot and no evidence of sales tax payment was provided, no deduction was admissible under Rule 6(3)(b) of CENVAT Credit Rules, 2004.

3. The Tribunal analyzed the evidence and found that the Appellant could not establish the payment of sales tax as claimed. It was noted that a significant portion of the demand pertained to a period where evidence of sales tax payment was lacking. In light of the settled legal principles and to safeguard the interest of revenue, the Tribunal directed the Appellants to make a pre-deposit of 25% of the duty confirmed. The Appellants had already deposited a certain amount, which was allowed to be deducted from the required pre-deposit. The remaining balance was to be deposited within six weeks, after which the waiver of the remaining dues adjudged would be granted, and recovery stayed during the pendency of the appeal.

This comprehensive analysis of the judgment highlights the issues, arguments presented, legal principles applied, and the final decision rendered by the Tribunal.

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