2004 (7) TMI 502 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of duty and penalty under Rule 173Q

Analysis:
1. The application for waiver of pre-deposit of duty of Rs. 16,67,051/- and penalty of Rs. one lakh was made, arising from the Commissioner (Appeals), Gwalior. The disallowed amounts included Modvat credit on broken shells, BOPP tapes, and cold glass.

2. The disallowance of credit on broken shells was based on the argument that the shells were broken during transit and not used in the manufacture of finished products. Similarly, credit on BOPP tapes was disallowed due to their use in packing exempted products, and credit on shells was disallowed as defective inputs not used in the manufacturing process.

3. The Tribunal found no case against the disallowance of Modvat credit on broken shells as they never reached the factory. The reliance on a decision regarding defective inputs under Rule 56D was deemed irrelevant. The Department was granted an extended period of limitation due to discrepancies in records regarding the quantity of broken shells used.

4. The Tribunal directed the deposit of Rs. 4 lakhs towards duty within 8 weeks, after which the pre-deposit of the remaining duty and penalty would be waived, and recovery stayed during the appeal. Non-compliance would lead to vacation of stay and dismissal of the appeal without notice.

5. Compliance was required to be reported by a specified date to ensure adherence to the Tribunal's directives.