Tribunal Upholds Inadmissible CENVAT Credit Demand, Requires Rs.10,00,000 Predeposit

The Tribunal upheld the demand for inadmissible CENVAT credit against the Appellant, directing them to predeposit Rs.10,00,000/- within six weeks. The Appellant's plea regarding post-1.4.2008 compliance with Rule-6 provisions was deemed unconvincing, with the Tribunal emphasizing the need for timely reversal of inadmissible credit. For the pre-2008 period, where both dutiable and exempted goods were cleared without segregating credit, the Appellant was held liable to predeposit a reasonable portion of the demand. Waiver and stay were granted for the remaining dues upon compliance with the Tribunal's directives.

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Issues:
- Appellant's request for waiver and stay of adjudged dues
- Demand for inadmissible CENVAT credit on common input services
- Appellant's compliance with Rule-6 provisions
- Applicability of extended period of limitation

Analysis:
The appellant sought waiver and stay of adjudged dues amounting to Rs.17,15,577/- due to clearing both dutiable and exempted final products without separate accounts for common input services. The demand included an amount of over Rs.16,00,000/- calculated at 10% of exempted goods price, with education cesses added. The appellant argued compliance with Rule-6 provisions post 1.4.2008 but claimed inability to address pre-2008 period due to lack of stipulated reversal basis. The appellant also contended against invoking the extended limitation period, citing delayed departmental objection and inability to claim Finance Act 2010 benefits.

The Tribunal found the appellant's plea unconvincing regarding the post-1.4.2008 period, noting that Rule-6 amendments allowed for calculating and reversing inadmissible CENVAT credit on common input services to avoid demands under Rule 6(3). Despite claiming belated reversal, the appellant's non-compliance with the prescribed time limit was highlighted. Regarding the pre-2008 period, where both dutiable and exempted goods were cleared without segregating CENVAT credit, the Tribunal held the appellant liable to predeposit a reasonable portion of the demand. Consequently, the appellant was directed to predeposit Rs.10,00,000/- within six weeks, with waiver and stay granted for the remaining dues upon compliance.

In conclusion, the Tribunal upheld the demand for inadmissible CENVAT credit, emphasizing the appellant's responsibility to comply with Rule-6 provisions and predeposit a specified amount to address the liability arising from the mixed clearance of dutiable and exempted final products without segregation of CENVAT credit.

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