2013 (11) TMI 623 - AT - Central Excise

Tribunal grants partial waiver requiring 25% deposit of Cenvat Credit dues despite company closure and financial distress

The Tribunal partially granted waiver of pre-deposit in two Cenvat Credit appeals totaling Rs.4,54,28,131/- and Rs.15,00,544.66 plus penalties. Despite ... Eligibility of CENVAT Credit – Extended Period of Limitation – Waiver of Pre-deposit – Held that:- Appellant availed cenvat credit on goods not falling under the category of capital goods - Following Vandana Global Ltd. Versus CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] – For the demands involving extended period of limitation, total waiver has been granted and for the normal period, 25% of the CENVAT Credit has been directed to be deposited – upon such submission rest of the duty to be waived till the disposal – Partial stay granted. Issues:1. Waiver of pre-deposit of Cenvat Credit and penalty in two appeals.Analysis:The applicant sought waiver of pre-deposit of Cenvat Credit totaling Rs.4,54,28,131/- and Rs.15,00,544.66 along with an equal amount of penalty in two appeals. The advocate for the applicant argued that the issue revolved around the availment of Cenvat credit on specific items used in manufacturing, highlighting the financial distress of the company with significant losses and closure since November 2010. The advocate urged for a different approach due to the company's dire financial situation.The Revenue's representative contended that the Tribunal consistently required pre-deposit for the normal period while granting stay for the extended period in similar cases. The Tribunal had been following a specific approach regarding the availability of Cenvat Credit on certain items as capital goods.Upon hearing both sides and examining the records, the Tribunal noted its consistent stance on the eligibility of Cenvat Credit on particular items as capital goods under the Cenvat Credit Rules. The Tribunal had previously applied a specific ratio in similar cases. For the demands within the normal period, the Tribunal directed the applicant to deposit 25% of the Cenvat Credit amounts, which were approximately Rs.16.68 Lakhs and Rs.15.00 Lakhs for the two appeals. The Tribunal did not find merit in the argument that the 25% deposit would be burdensome for the applicant. Consequently, the Tribunal ordered the applicant to deposit the specified amounts within eight weeks, after which the balance dues would be waived, and recovery stayed during the appeal's pendency. Failure to comply would lead to the dismissal of the appeal without further notice.In conclusion, the Tribunal maintained its consistent approach in this case by requiring a 25% deposit of the Cenvat Credit amounts for the normal period, emphasizing the importance of compliance within the specified timeframe to avoid dismissal of the appeal.