JAYPEE REWA PLANT Vs. UNION OF INDIA

JUDGEMENT

(1.) In this petition, for a writ of certiorari , the petitioner assails the validity of an interim order passed by the CESTAT, whereby the Tribunal has waived pre-deposit of only 50% of the duty demanded from the petitioner while directing deposit of the balance amount. The challenge arises in the following circumstances.

(2.) The petitioner-company is engaged in the manufacture of cement falling under various Chapters of the First Schedule to the Central Excise Tariff Act, 1985. It is common ground that the petitioner is availing of the facility of Cenvat credit on inputs and capital goods as provided under the Cenvat Credit Rules, 2002. In terms of five different notices issued to the petitioner, the Commissioner, Customs and Central Excise called upon the petitioner to show cause why Cenvat credit of Rs. 1,16,14,350/- availed of by the petitioner-company during the period January to August, 2003 be not disallowed and the amount recovered from it as the items in regard to which the said credit was taken did not qualify for the same. The petitioner filed its reply to the show cause notices which was considered and rejected by the Commissioner in terms of an order dated 24th March, 2005. The Commissioner was of the view that petitioner had not produced any material to show that welding electrodes which was one of the items on which the credit had been claimed were used for purposes other than maintenance. The Commissioner further held that such electrodes used for repairs and maintenance were not eligible capital goods on which Cenvat credit could be claimed. So also the Commissioner was of the view that iron and steel products such as angles, plates, MS Channels, Plates, rods, Cleanflo and chemicals etc. were also used by the petitioner-company for maintenance and repairs of their plant and machinery and for fabrication of various structures. Such structures also could not, according to the Commissioner, be treated as part of the machinery. Similarly, the Commissioner was of the view that miscellaneous chemicals used for non-manufacturing purposes were not entitled to any such Cenvat credit nor was the petitioner-company entitled to claim any such credit on cleanflo used to prevent biological fouling or removal of iron dust from the surface of the machinery or to suppress scaling etc. Suffice it to say that the Commissioner confirmed the demand for Rs. 1,76,44,698/- on account of Cenvat credit claimed by the petitioner on as many as 91 items and imposed a penalty of Rs. 40 lacs on the petitioner in terms of Rule 13 of the Cenvat Credit Rules, 2002. Interest at the proportionate rate on the credit disallowed was also levied by the Commissioner.

(3.) Aggrieved by the above order, the petitioner-company appealed to the Customs Excise and Service Tax Appellate Tribunal, Delhi. The appeal was accompanied by an application under proviso to Section 35F of the Central Excise Act for a complete waiver of the pre-deposit of the amount of duty demanded and the penalty levied by the Commissioner. The petitioner's case before the Tribunal was that the Commissioner had failed to consider each one of the 91 items in regard to which the demand for reversal of the credit was made. It was also contended that the items in question were not for repairs or maintenance and fabrication of structures. These items or at least most of them were, according to the petitioner, capital goods or parts of capital goods which were eligible for the credit availed of by the petitioner. The Tribunal has, in terms of the order impugned in this writ petition, allowed the application for waiver in part. It has while waiving the pre-deposit of the penalty amount in toto, directed deposits of 50% of the duty amount while waiving the rest. The Tribunal has observed :