2004 (11) TMI 383 - AT - Central Excise

Summary

Issues: Denial of Modvat credit and imposition of penalty for non-registration during the disputed period.

In this case, the Appellate Tribunal CESTAT, Chennai, examined the denial of Modvat credit amounting to Rs. 22,432/- to the assessee for the period April'01 - Jan'02, along with the imposition of a penalty of Rs. 2.35 lacs. The Tribunal noted a prior order in the same assessee's case where it was held that there was no intention to evade payment of duty. The Tribunal classified the assessee's product as "Industrial Fabrics" under sub-heading 5911.90, with excise duty payable on the product, although the demand was considered time-barred due to the absence of intent to evade duty. For the disputed period, the assessee paid duty on clearances after accepting the Revenue's stand, which was upheld in the previous final order. However, the lower authorities denied the assessee Modvat credit on inputs during the disputed period due to the lack of Central Excise registration, leading to the current challenge.

The consultant representing the appellants argued that the Tribunal had allowed Modvat credit in similar cases and contended that the penalty imposed on the appellants was unsustainable given the circumstances. The Tribunal considered the submissions from both sides and found that the appellants had a prima facie case. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery as requested by the appellants.