2012 (9) TMI 918 - AT - Central Excise

Waiver of pre deposit - whether the appellant would be eligible for Cenvat credit in respect of Saree Guard - Held that - Saree Guard is fitted with two wheelers as per the requirement of Rule 123 of Central Motor Vehicles Rules and two wheelers are cleared on payment of duty on the value which includes the value of Saree Guard. In view of this the appellant have a prima facie case in their favour. The requirement of pre-deposit of Cenvat credit demand interest and penalty is therefore waived for hearing of the appeal and recovery thereof is stayed till disposal of the appeal - Stay granted.

Summary

Issues:
- Eligibility for Cenvat credit in respect of Saree Guard
- Disallowance of Cenvat credit by the Department
- Appeal against Order-in-Original dated 10-4-2004
- Stay application filed by the Appellant

Analysis:
The judgment revolves around the eligibility of the appellant, a manufacturer of two-wheelers, for Cenvat credit concerning the Saree Guard fitted on motor cycles. The Department disallowed the Cenvat credit, leading to a demand of &8377;1,96,81,487/- confirmed in the Order-in-Original dated 10-4-2004 by the Commissioner, who also imposed penalties and interest. The primary issue is whether the appellant can claim Cenvat credit for the Saree Guard value included in the excise duty paid. The appellant filed an appeal challenging the Commissioner's order and simultaneously requested a stay on the recovery process.

During the hearing, the appellant's counsel argued that the Saree Guard is a mandatory requirement under Rule 123 of the Central Motor Vehicles Rules, without which two-wheelers cannot be cleared. It was emphasized that excise duty had been paid on the value inclusive of the Saree Guard, making the disallowance of Cenvat credit unjustified. The appellant asserted a strong prima facie case and sought a waiver of the pre-deposit requirement for the Cenvat credit demand, interest, and penalty until the appeal's final disposal.

The Department's representative opposed the stay application, supporting the Commissioner's findings in the impugned order. However, upon considering both parties' arguments, the Tribunal found that the Saree Guard is a mandatory fitting as per Rule 123 of the Central Motor Vehicles Rules and that duty is paid on the value encompassing the Saree Guard. Consequently, the Tribunal ruled in favor of the appellant, acknowledging their prima facie case. As a result, the requirement for pre-deposit of the Cenvat credit demand, interest, and penalty was waived for the appeal's hearing, and recovery was stayed until the appeal's final resolution. The stay application was granted, providing relief to the appellant in this matter.