By TIOL News Service

MUMBAI, DEC 16, 2013: DURING the course of manufacture of final products various intermediate products viz. CPS-DFA, CPS-Low Volatile, CPS-Pitch Oil and CPS-Glycerin and produced. The CPS-DFA was used captively for manufacture of soaps and detergents.

Other intermediate products are cleared toM/s HLL on payment of duty by the appellant but the same are retained in the factory premises of the appellant.

Some quantities of such intermediate products were also sold to other units of HLL and other job workers of HLL on payment of duty as per the directions of HLL.

The appellant availed CENVAT credit of the duty paid on the intermediate products.

The department objected to availment of the said credit on the above three intermediate products on the ground that these three intermediate products being cleared from the factory of the appellant were not the inputs for their final products viz. toilet soaps and detergent powder manufactured at the factory of the appellant.

The lower authorities confirmed the demand of Rs.8,59,714/- along with equivalent penalty and hence the appellant is before the CESTAT.

The appellant placed reliance on the Bombay High Court decision in Mahindra & Mahindra - (2010-TIOL-912-HC-MUM-CX) to justify their claim of CENVAT credit.

The Bench observed -

"7. Admittedly the case of the department is that the applicants have paid duty on intermediate product and thereafter they have taken credit for the same. Undisputedly the applicants have paid duty on the intermediate product used in the manufacture of final product and they have paid duty while clearing these new products to their other units. Even if they paid duty wrongly or illegally, as per the Hon'ble High Court decision in the case of Mahindra & Mahindra (supra) wherein it was held that if the duty illegally paid and once the same has not been refunded they cannot be denied the CENVAT credit. In these circumstances the applicants are able to make out a prima facie case for waiver of pre-deposit of dues adjudged against them. Therefore the requirement of pre-deposit of dues is waived and recovery thereof is stayed during the pendency of the appeal."

In fine, the Stay petition was allowed.

In passing: Incidentally, the facts of the case and the submissions made by both sides do not seem to make a coherent reading. A small measure of proof reading would help, perhaps!

(See 2013-TIOL-1867-CESTAT-MUM)