2013 (11) TMI 230 - AT - Central Excise

Tribunal upholds CENVAT credit demand for manufacturer, waives pre-deposit

The Tribunal upheld the demand for CENVAT credit of Rs. 14,94,909/- for the period from 2006-07 to 2008-09, along with interest and penalty, against the ... SSI Exemption – Cenvat Credit of duty on Inputs lying in stock - Applicability of Rule 11 (2) of CC Rules – Bar of Limitation – Held that:- The appellants case is squarely covered by provision of Sub-rule (2) of Rule 11 of CENVAT Credit Rules, 2004, as this Rule is applicable in respect of a manufacturer who opt for exemption based on value on quantity of clearances in a financial year - the appellant at the beginning of every financial year had opted for SSI Exemption - they were liable to pay an amount equal to the Cenvat credit availed in respect of inputs lying in stock or in process or contained in final products lying in stock which they have not done - When the Appellants case is covered by the provisions of Rule 11(2) of CENVAT Credit Rules, and the provisions of this sub-rule are clear and unambiguous, the same have to be given effect to and there is no scope for giving an interpretation to the provisions of Rule 11(2) which is at variance from the natural grammatical meaning of the wordings of this rule - the appellants may have a good case and as such entire duty demand may not be within limitation period. Waiver of Pre-deposit - The appellant have already paid an amount along with interest - the amount already paid is sufficient for hearing of this appeal - The requirement of pre-deposit of balance amount of Cenvat Credit demand interest and penalty is waived for hearing of the appeal – stay granted. Issues:1. Whether the appellant correctly availed SSI exemption and CENVAT credit during 2006-07 to 2008-09.2. Whether the appellant was required to reverse the CENVAT credit availed in respect of inputs when opting for SSI exemption.3. Whether the demand for CENVAT credit of Rs. 14,94,909/- for the period from 2006-07 to 2008-09, along with interest and penalty, is justified.4. Whether the longer period can be invoked due to suppression of relevant facts by the appellant.5. Whether the requirement of pre-deposit of CENVAT credit demand, interest, and penalty can be waived for the hearing of the appeal and recovery stayed during the pendency of the appeal.Analysis:1. The appellant, a manufacturer of switch gears and light fittings, availed SSI exemption during 2006-07 to 2008-09 while also taking CENVAT credit on inputs. The issue arose when the department alleged that the appellant did not reverse the credit availed in respect of inputs when opting for SSI exemption at the beginning of each financial year. A show cause notice was issued for a demand of CENVAT credit amounting to Rs. 14,94,909/- for the mentioned period, along with interest and penalty. The Additional Commissioner confirmed this demand and penalty, which was upheld by the Commissioner (Appeals), leading to the present appeal and stay application.2. The appellant argued that their case is supported by decisions of various High Courts and Tribunals, claiming that the CENVAT credit demand is time-barred as they regularly filed ER-1 returns declaring the credit availed. The appellant contended that no information was suppressed, and hence the longer period cannot be invoked. The Department, however, argued that the appellant was required to reverse the CENVAT credit when opting for SSI exemption, as per Rule 11(2) of CENVAT Credit Rules, 2004, and that the appellant suppressed relevant facts.3. The Tribunal found that the appellant's case fell within the provisions of Rule 11(2) of CENVAT Credit Rules, 2004, as they opted for SSI exemption at the beginning of each financial year. The Tribunal held that the judgments cited by the appellant were not applicable as they pertained to different scenarios. While the appellant may have a good case regarding limitation, the Tribunal acknowledged that the entire duty demand may not be within the limitation period.4. Considering all aspects, the Tribunal waived the requirement of pre-deposit for the balance amount of CENVAT credit demand, interest, and penalty for the hearing of the appeal. The recovery of the waived amount was stayed during the pendency of the appeal. The Tribunal noted that the appellant had already paid a significant amount, which was deemed sufficient for the appeal hearing.