By TIOL News Service

MUMBAI, JAN 18, 2013: A sizeable number of cases emanating from the Central Excise Commissionerates nowadays relate not to the fact that the assessee has not paid any Central Excise duty or there is any undervaluation but that the assessee should not have paid any duty by taking CENVAT Credit.

The present case is one of such kind.

The applicant is a merchant exporter and the imported raw material was supplied to M/s Maharashtra Seamless Ltd. under rule 4(5) of the CENVAT Credit Rules and the goods were manufactured and thereafter the applicant paid duty by utilizing the CENVAT credit as well as paying from PLA.

The CCE, Raigad has denied CENVAT credit of Rs.2,78,77,385/- availed on the inputs on the ground that the applicant has no facility to manufacture the excisable goods, therefore, the applicants have wrongly availed the credit.

Before the CESTAT, the applicant submitted that they are merchant exporters and the imported raw material was supplied to M/s Maharashtra Seamless Ltd. under rule 4(5) of the CENVAT Credit Rules and the goods were manufactured and thereafter the applicant paid duty by utilizing the credit as well as paying from PLA; that the duty paid is much more than the credit now being denied; that the contention is that Notification 53/2003-Cus under which the goods have been imported, allows the import of raw material by a merchant exporter having supporting manufacturer whose name and address is specified on the licence; that the applicant disclosed the name of supporting manufacturer and the goods were manufactured by the supporting manufacturer and duty was paid by the applicant, hence the demand is not sustainable.

The Revenue representative had a one line submission - the applicant has no facility to manufacture the goods and, therefore, the credit in respect of the raw material is not available to the applicant & the demand is rightly made.

The Bench observed -

"5. We find that the applicant had paid the duty which is more than the credit now being denied. Further, we find that the Hon'ble Bombay High Court in the case of CCE, Pune-III vs. Ajinkya Enterprises reported in = (2012-TIOL-578-HC-MUM-CX), held that once the duty on final product has been accepted by the Revenue, in such a case the credit cannot be denied. In view of the above, as the applicant had paid more duty than the credit now being denied, pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal. The stay petition is allowed."

In passing: Time to put an induction & thermal mechanism into operation - See 2012-TIOL-929-HC-AHM-CX.

(See 2013-TIOL-116-CESTAT-MUM)