2004 (4) TMI 430 - AT - Central Excise

Summary

Issues: Disallowance of deemed Modvat credit and imposition of penalty.

Analysis:
The Appellate Tribunal CESTAT, New Delhi, presided over by Shri P.G. Chacko, J., dealt with the issue of disallowance of deemed Modvat credit amounting to over Rs. 34,000/- for the period January to September, 1999, and the imposition of a penalty of Rs. 2,000/- on the party. The authorities disallowed the credit as it was taken based on invoices issued by input-manufacturers working under the Compounded Levy Scheme, which declared that duty liability was 'to be discharged'. However, the applicants failed to provide any evidence showing that the duty liability had actually been discharged. The Learned DR argued that without the input-suppliers' declaration of duty discharge, the applicants were not entitled to avail the deemed credit under Notification No. 58/97-C.E. The Tribunal found the DR's argument prima facie correct, as the applicants did not present a strong case for waiver of pre-deposit and stay of recovery, nor did they demonstrate financial hardships supported by evidence.

After examining the records and hearing the DR, the Tribunal directed the applicants to pre-deposit the disallowed amount of Rs. 34,000/- within four weeks from the date of receipt of the order. If the applicants complied with this direction, there would be a waiver of pre-deposit and stay of recovery concerning the penalty and the remaining duty amount. The Tribunal set a deadline for compliance and instructed the Registry to issue a certified copy of the order promptly. The Tribunal's decision highlighted the importance of complying with procedural requirements and providing sufficient evidence to support claims for Modvat credit to avoid disallowance and penalties.