Appellant's Deposit Deemed Sufficient for Appeal Admission on CENVAT Credit - Predeposit Waived

The judge found the deposit made by the appellant to be sufficient for the admission of the appeal regarding the recovery of amounts due for not reversing CENVAT credit on inputs used in manufacturing exempted products. As a result, the predeposit of the remaining dues was waived, and the collection of these dues was stayed pending the appeal's final hearing.

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Issues:
Recovery of amounts due as per Rule 6 of CENVAT Credit Rules, 2004 for not reversing CENVAT credit on inputs used in manufacturing exempted products.

Analysis:
The appellant, engaged in manufacturing steel forgings, had undertaken job-work for the Ordinance Factory of the Government of India involving both dutiable and exempted products. The Revenue initiated action for recovery of amounts due as the appellant had not reversed CENVAT credit on inputs used in manufacturing exempted products. The demand was calculated at 5% or 10% of the value of exempted products cleared to the Ordinance Factory, depending on the period in question.

Aggrieved by the adjudication order, the appellants appealed to the Commissioner (Appeals), who upheld the order. Subsequently, the appellants filed an appeal before the Tribunal, along with a petition for waiver of predeposit of dues for the admission of the appeal.

The consultant for the appellant argued that they had repaid a portion of the CENVAT credit in cash based on a proportionate basis, specifically citing the quantity of furnace oil used per tonne of metal forged for exempted products. The consultant requested that this deposit be considered sufficient for the admission of the appeal.

In response, the Ld. AR for Revenue contended that there is a prescribed formula for credit reversal under Rule 6(3A) of the CENVAT Credit Rules, 2004, and failure to adhere to this formula results in a demand for payment, typically 10% of the value of the exempted product.

After considering the arguments from both parties, the judge noted that even if the reversal as per Rule 6(3A) is done at a later stage, it should suffice as discharge of the liability. The judge also observed that the basis adopted by the appellant for the reversal of credit would result in a similar amount as required under the prescribed formula. The judge decided to verify the details during the final hearing of the appeal by requesting information from the concerned formation or the assessee's records.

Ultimately, the judge deemed the deposit made by the appellant as sufficient for the admission of the appeal. Consequently, the predeposit of the remaining dues arising from the impugned order was waived, and the collection of these dues was stayed during the pendency of the appeal.

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