2004 (10) TMI 382 - AT - Central Excise

Issues: Application for waiver of pre-deposit of Central Excise duty and penalty.

Waiver of Pre-deposit of Central Excise Duty:
The case involves an application by M/s. Emkay Industries seeking waiver of pre-deposit of Central Excise duty amounting to Rs. 72,65,666/- and an equivalent penalty plus Rs. Five lakhs. The appellant's representative argued that the Modvat credit was disallowed on the basis of receiving invoices without goods, without any inquiry at the suppliers' end. It was highlighted that the appellant purchased HR/CR coils from registered dealers for manufacturing motor vehicle parts, which were subsequently cleared after payment of duty. Reference was made to a similar case where the Tribunal had stayed the recovery of Modvat credit. On the other hand, the Departmental Representative opposed the prayer, citing the admission by the Applicants' Manager that they were not receiving HR/CR strips. The Tribunal considered the lack of inquiry by the Department from registered dealers regarding the supply of raw materials, the manufacturing of motor vehicle parts by the Applicants during the relevant period, and the clearance of these parts after payment of duty. Consequently, the Tribunal found that the Applicants had established a strong prima facie case for the waiver of pre-deposit of the entire amount of duty and penalty. As a result, the recovery of the duty and penalty was stayed during the pendency of the Appeal scheduled for regular hearing on 16-11-2004.

Analysis:
The central issue in this judgment revolves around the application for the waiver of pre-deposit of Central Excise duty and penalty by M/s. Emkay Industries. The appellant's argument primarily focused on the disallowance of Modvat credit due to the alleged receipt of invoices without goods, emphasizing the lack of inquiry by the Department at the suppliers' end. It was crucially pointed out that the appellant procured HR/CR coils from registered dealers for the specific purpose of manufacturing motor vehicle parts, which were subsequently cleared after the payment of duty. Drawing parallels to a similar case where the Tribunal had intervened by staying the recovery of Modvat credit, the appellant sought a comparable resolution. On the contrary, the Departmental Representative contested the application, citing the admission made by the Applicants' Manager regarding the non-receipt of HR/CR strips. The Tribunal meticulously evaluated the submissions from both sides, particularly noting the absence of any Departmental inquiry into the supply of raw materials from registered dealers and the undisputed manufacturing and clearance of motor vehicle parts by the Applicants during the relevant period. Ultimately, the Tribunal concluded that the Applicants had presented a compelling prima facie case for the waiver of pre-deposit of the entire duty and penalty amount, leading to the stay of recovery pending the Appeal's regular hearing scheduled for 16-11-2004.

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