2012 (8) TMI 850 - AT - Central Excise

Tribunal grants partial stay, requires Rs. 3 lakh deposit. Interplay of excise duty, Cenvat credit.

The Tribunal partially allowed the stay application, directing the appellant to deposit Rs. 3 lakhs within four weeks. Compliance would result in waiving ... Repacking constituting manufacture - Chapter Note 10 of Chapter 29 - Cenvat credit - CVD credit on imported inputs - pre-deposit of duty for grant of stayRepacking constituting manufacture - Chapter Note 10 of Chapter 29 - Cenvat credit - pre-deposit of duty for grant of stay - Entitlement to interim relief (waiver of the balance pre-deposit and stay of recovery) in respect of denial of Cenvat credit on CVD paid on imported N Butyl acetate where the appellant repacked bulk imports into smaller packs. - HELD THAT: - The Tribunal accepted the appellant's contention that repacking of imported N Butyl acetate into smaller packs falls within the ambit of manufacture as contemplated by Chapter Note 10 of Chapter 29, and therefore the appellant's clearance of the goods on payment of excise duty and claim of Cenvat credit on CVD paid is prima facie maintainable. On that basis the Tribunal found merit in the challenge to the denial of Cenvat credit and granted partial interim relief. The appellant was directed to deposit a specified sum within four weeks; upon such compliance the requirement of pre deposit of the balance amount of penalty was waived and recovery of the balance was stayed until disposal of the appeal. [Paras 4]Stay application partly allowed; appellant to deposit Rs. 3 lakhs within four weeks, and on compliance the balance pre deposit requirement of penalty in respect of the Cenvat credit denial is waived and recovery stayed until disposal of the appeal.Final Conclusion: The Tribunal found merit in the appellant's plea that repacking of imported N Butyl acetate amounts to manufacture under Chapter Note 10 of Chapter 29, granted partial stay of the demand relating to denial of Cenvat credit subject to a deposit of Rs. 3 lakhs, waived the balance pre deposit condition and stayed recovery of the balance penalty until the appeal is decided. Issues:1. Confirmation of duty demand on importing and repacking N-Butyl acetate.2. Denial of Cenvat credit on the imported N-Butyl acetate.3. Appeal for waiver of pre-deposit condition regarding duty demand.Analysis:Issue 1:The appellant faced a duty demand of Rs. 31,58,129/- for importing N-Butyl acetate in bulk, repacking it, and clearing smaller packs with excise duty payment. The department contended that this activity constituted trading, not subject to excise duty, leading to the denial and confirmation of Cenvat credit of Rs. 28,64,826/-. The appellant offered to pre-deposit the remaining amount of duty to avoid detailing the facts of the other two counts.Issue 2:The appellant's advocate argued that the repacking of N-Butyl acetate amounted to manufacturing under Chapter Note 10 of Chapter 29, justifying the excise duty payment and Cenvat credit availed. Even if the department's view was accepted, denying Cenvat credit on the inputs was unjustified. The appellant sought waiver of pre-deposit for the Cenvat credit related to N-Butyl acetate, offering to deposit Rs. 3 lakhs for the other demands.Issue 3:The department opposed the waiver, asserting that the appellant, not being a manufacturer, was ineligible for Cenvat credit on the imported N-Butyl acetate. After considering the arguments, the Tribunal partially allowed the stay application, directing the appellant to deposit Rs. 3 lakhs within four weeks. Compliance would result in waiving the pre-deposit requirement for the remaining penalty amount, with recovery stayed until the appeal's disposal.This judgment highlights the complex interplay between manufacturing activities, excise duty obligations, and Cenvat credit eligibility concerning the import and repacking of goods. The Tribunal's decision to allow partial stay and waiver of pre-deposit showcases a nuanced approach to balancing the interests of the appellant and the revenue authorities pending the final appeal resolution.