2005 (3) TMI 512 - AT - Central Excise

Summary

Issues:
Application for waiver of pre-deposit of duty disallowed as Modvat credit on parts and components of capital goods.

Analysis:
The case involved two applications by M/s. India Cements Ltd. seeking waiver of pre-deposit of duty amounting to Rs. 47,48,908/- and Rs. 22,30,892/- disallowed as Modvat credit on parts and components of capital goods. The petitioner's consultant argued that all items were parts or components of cement machinery, making them eligible for Modvat credit. Reference was made to a previous decision by the Commissioner (Appeals) allowing Modvat credit for similar materials under a specific heading, which had not been challenged. Financial hardship was also emphasized due to significant losses incurred by the applicants. On the other hand, the respondent contended that steel structures could not be considered parts of cement machinery, as the machinery was complete without them. It was highlighted that the Modvat credit had been utilized eight years ago, and a deposit was requested under Section 35F of the CE Act, 1944.

Upon evaluating the arguments presented, the Tribunal acknowledged the correctness of the respondent's assertion that steel structures/platforms could not be classified as parts of capital goods. Referring to Rule 57Q of the CE Rules, 1944, it was noted that only goods falling under specified Tariff Heading were considered capital goods. Since the issue of credit admissibility was debatable, the appellants failed to establish a prima facie case for complete waiver of pre-deposit. Considering the plea of financial hardship, the Tribunal directed the appellants to pre-deposit Rs. 10,00,000/- within eight weeks, following which pre-deposit of the remaining duty and penalty was waived, with recovery stayed during the appeal's pendency. Compliance reporting was scheduled for a future date.