2004 (8) TMI 531 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of duty and penalty arising from disallowance of Modvat credit on inputs.

Analysis:
1. The issue at hand pertains to an application for waiver of pre-deposit of duty amounting to Rs. 77,61,313 and a penalty of Rs. 50,000. The dispute arose from the Commissioner of Central Excise, Visakhapatnam's decision to disallow Modvat credit on inputs due to the non-filing of a declaration under Rule 57H(1) of the Central Excise Rules, 1944. This non-filing was alleged to have hindered the department's ability to verify the stock of inputs. Additionally, the department contended that the applicants were not entitled to avail the credit suo motu.

2. Upon hearing both sides, it was noted that the applicants did file a declaration under Rule 57H(1) on 31-3-1998, which was received by the Excise authorities on 6-4-1998. Queries raised by the Asstt. Commissioner were also duly answered by the applicants. Notably, during the relevant period in December 1997, Rule 57H(1) did not explicitly require satisfaction from the Asstt. Commissioner regarding inputs in stock or finished products, unlike in the period 1993-1994. Moreover, it was observed that the applicants could not have filed the declaration in December 1997 as the department initially classified their final product under a duty-free category, only later changing it to attract duty.

3. Considering these circumstances, the Tribunal found that a prima facie case for waiver had been established. Consequently, the requirement of pre-deposit of duty and penalty was dispensed with, and the recovery thereof was stayed pending the appeal. The Tribunal's decision was based on the evolving classification of the final product and the absence of a specific requirement for satisfaction under Rule 57H(1) during the relevant period, supporting the applicants' claim for waiver.