2004 (5) TMI 475 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty amounts for two companies.
2. Interpretation of Section 112 of the Finance Act, 2000 regarding Modvat credit on HSD oil.
3. Applicability of the decision in the case of C.C.E., Hyderabad v. Associated Cement Co. Ltd. to the current scenario.
4. Prima facie case for waiver of pre-deposit and the directed deposit amounts.

Issue 1: Waiver of Pre-Deposit
The case involved two applications seeking a waiver of pre-deposit of duty amounts for M/s. Flex Industries Ltd. and FCL Tech. & Products Ltd. The appellant argued that demands were confirmed against them due to taking Modvat credit on HSD oil, which was disallowed under Section 112 of the Finance Act, 2000. The High Court had temporarily restrained coercive measures for recovery. The Tribunal directed both companies to deposit specified amounts within 8 weeks, with a waiver of pre-deposit for the remaining amounts during the appeal's pendency.

Issue 2: Interpretation of Section 112 of the Finance Act, 2000
The appellant contended that Section 112 of the Finance Act, 2000, disallowing Modvat credit on duty paid on HSD oil, was challenged for constitutional validity in the High Court. The respondent argued that this provision rendered the companies ineligible for Modvat credit. The Tribunal found merit in the respondent's argument, leading to the directive for partial deposit by the companies.

Issue 3: Applicability of Previous Case Law
Reference was made to the decision in C.C.E., Hyderabad v. Associated Cement Co. Ltd., which allowed Modvat credit on HSD oil until a specific amendment. The appellant sought to rely on this decision, but the respondent highlighted the absence of consideration for Section 112 of the Finance Act, 2000. The Tribunal agreed with the respondent, emphasizing the relevance of the current legal provision in determining the companies' eligibility for Modvat credit.

Issue 4: Prima Facie Case for Waiver of Pre-Deposit
After considering arguments from both sides, the Tribunal concurred with the respondent's position. It found that the companies had not established a prima facie case for a complete waiver of pre-deposit. Consequently, the Tribunal directed the companies to make specified deposits within a stipulated timeframe. Compliance with this directive would result in a waiver of pre-deposit for the remaining amounts during the appeal process.

This judgment from the Appellate Tribunal CESTAT, New Delhi addressed the waiver of pre-deposit for two companies concerning Modvat credit on HSD oil under Section 112 of the Finance Act, 2000. The Tribunal balanced arguments regarding constitutional validity, previous case law, and the current legal provisions to determine the companies' eligibility for the credit. Ultimately, a partial deposit was directed, with a waiver of pre-deposit for the remaining amounts pending the appeal's resolution.