2002 (1) TMI 475 - AT - Central Excise

Summary

Issues Involved:
1. Availing Modvat credit on non-duty paid iron and steel scrap.
2. Appeal against the order of the Addl. Commissioner.
3. Determination of liability regarding the availed Modvat credit.
4. Prima facie case in favor of the appellants.
5. Pre-deposit requirement and stay of realization of confirmed duty and penalty.

Analysis:

1. The case involves the appellants manufacturing steel ingots and availing Modvat credit on iron and steel scrap. The Anti Evasion Officers found fictitious Central Excise Gate Passes for iron and steel scrap during a search, leading to proceedings against the appellants. The Addl. Commissioner confirmed a demand against the appellants and imposed penalties on them and individuals involved. The issue revolves around the availing of Modvat credit on non-duty paid iron and steel scrap, which the appellants claim they received under valid gate passes.

2. M/s. A.B. Tools Ltd. filed an appeal against the Addl. Commissioner's order, which was rejected by the Commissioner (Appeals). This rejection forms the basis of the appeal before the Appellate Tribunal CEGAT, New Delhi, where the case is being reviewed.

3. The Tribunal considered the submissions from both parties regarding the availed Modvat credit. The appellants argued that they had received the iron and steel scrap as mentioned in the gate passes, enabling them to claim the credit. They contended that they were not aware of the duty status of the received scrap and highlighted the admissibility of deemed Modvat credit during the relevant period. However, the Tribunal noted that the gate passes were fictitious, issued by a non-existent entity, as confirmed by detailed evidence and discussions in the original order. The Tribunal found that the appellants failed to establish a prima facie case in their favor, leading to a directive for a pre-deposit to proceed with the appeal.

4. The Tribunal examined the appellants' profit and loss account, showing a significant loss despite substantial sales. While acknowledging the financial situation, the Tribunal directed a pre-deposit of a specific amount, allowing for the waiver of the remaining duty and penalty. The realization of the confirmed amounts was stayed pending the appeal's outcome, with a deadline set for compliance.

5. In conclusion, the Tribunal addressed the issues of availing Modvat credit on non-duty paid scrap, the rejection of the appeal against the Addl. Commissioner's order, the liability determination, the establishment of a prima facie case, and the pre-deposit requirement with a stay on the realization of confirmed duty and penalty. The detailed analysis and directive for compliance set the course for further proceedings in the case.