Tribunal grants waiver for CENVAT Credit pre-deposit, stays recovery during appeal

The Tribunal granted the applicant's request for waiver of pre-deposit of CENVAT Credit, allowing the stay petition. It found the department's denial of CENVAT Credit on TMT bars at the Dankuni unit post-Zinga process lacked merit. The applicant initially sought permission for Zinga process, denied by the department, leading to duty payment for cleared TMT bars. The Tribunal waived the pre-deposit requirement, staying credit recovery during the appeal, citing the department's earlier denial of Rule 16C facility due to Zinga process classification as manufacture.

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Issues:
1. Application for waiver of pre-deposit of CENVAT Credit of Rs.62,13,443.

Analysis:
The applicant sought waiver of pre-deposit of CENVAT Credit amounting to Rs.62,13,443. The applicant, engaged in manufacturing TMT bars, had approached the department for carrying out the 'Zinga' process at their unit. Initially, the department informed the applicant that the Zinga process amounted to manufacture, thus denying the facility under Rule 16C of Central Excise Rules, 2002 for movement of TMT bars without payment of duty. Consequently, the applicant cleared duty-paid TMT bars from their Paharpur unit to the Dankuni unit, availed CENVAT Credit, processed the goods through the Zinga process, and cleared them on payment of duty directly to customers. The Ld. Advocate argued that since the department had earlier denied the facility under Rule 16C due to Zinga process being considered as manufacture, it would be incorrect to now deny CENVAT Credit on TMT bars received at the Dankuni unit.

Upon hearing both sides, the Tribunal found that the department's allegation that CENVAT Credit would not be admissible on TMT bars at the Dankuni unit, post the Zinga process, lacked merit. The Tribunal noted that the applicant had initially sought permission for clearance of TMT bars to Dankuni for the Zinga process, which was denied by the department citing Zinga process as manufacture. Consequently, the TMT bars were cleared from the Paharpur unit on payment of duty, and CENVAT Credit was availed at the Dankuni unit. Given the circumstances where processed goods were cleared on duty payment, the Tribunal waived the requirement of pre-deposit of CENVAT Credit and stayed its recovery during the pendency of the appeal, thereby allowing the stay petition.

In conclusion, the Tribunal granted the applicant's request for waiver of pre-deposit of CENVAT Credit, considering the initial denial of the facility under Rule 16C due to the Zinga process being categorized as manufacture by the department. The Tribunal found no merit in the department's contention that CENVAT Credit would not be admissible on TMT bars at the Dankuni unit after processing through the Zinga process, ultimately allowing the stay petition and staying the recovery of CENVAT Credit during the appeal process.

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