2013 (12) TMI 666 - AT - Central Excise

Tribunal Grants 100% Waiver on Duty & Penalty, Stays Recovery

The Tribunal granted a 100% waiver of pre-deposit of duty and penalty for the applicants, staying recovery during the appeal process. The case involved ... Denial of cenvat credit in terms of Rule7(1)(b) of the Cenvat Credit Rules, 2001- Expenses to be included in the assessable value – Waiver of Pre-deposit – Held that:- The duty has been paid by R&D unit - the applicants have taken the credit on the strength of supplementary invoice - Whether the credit is admissible or not has to be seen at the time of final hearing - As the duty has been paid and on the strength of that, they have taken the credit – Thus, the applicants have made out a case for 100% waiver of amount – Pre-deposits waived till the disposal – stay granted. Issues:1. Waiver of pre-deposit of impugned demands - duty and penalty confirmed by the impugned order.2. Inclusion of certain expenses in the assessable value as per CAS-4 for goods cleared from R&D unit to tractor unit.3. Entitlement to take cenvat credit on the strength of supplementary invoices issued by R&D unit.Analysis:1. The applicants sought waiver of pre-deposit of duty and penalty confirmed by the impugned order. The case involved two units - R&D unit and tractor unit. The Revenue contended that certain expenses should have been included in the assessable value as per CAS-4 when goods were transferred from the R&D unit to the tractor unit. Despite paying duty and issuing supplementary invoices including the previously omitted costs and expenses, the Revenue argued that the applicants were not entitled to take cenvat credit on the strength of these supplementary invoices as per Rule 7(1)(b) of the Cenvat Credit Rules, 2001.2. Upon hearing both sides, it was established that duty had been paid by the R&D unit, and the applicants had taken credit based on the supplementary invoices. The question of whether this credit was admissible or not was deferred to the final hearing. However, since duty had been paid and credit taken, the Tribunal found that the applicants had made a case for a 100% waiver of pre-deposit. Consequently, the Tribunal waived the requirement of pre-deposit of duty and penalty, staying the recovery during the appeal's pendency.This judgment highlights the importance of compliance with Cenvat Credit Rules and the implications of including expenses in the assessable value as per CAS-4. The decision to grant a waiver of pre-deposit was based on the applicants' payment of duty and subsequent credit taken, pending a final determination on the admissibility of the credit.