2004 (12) TMI 569 - AT - Central Excise

Summary

Issues:
Prayer to dispense with pre-deposit of duty and penalty.

Analysis:
The appellant sought to dispense with the pre-deposit of duty amounting to Rs. 34,04,320 and a personal penalty of Rs. 10 lakhs. The demand was confirmed due to the appellant clearing final products under exemption while availing Modvat credit on common inputs. The appellant argued that they were reversing the Modvat credit on inputs used for exempted goods, effectively nullifying the credit. The appellant cited Rule 6(3)(a) of Cenvat Credit Rules, 2002, which allows either repayment of Modvat credit or payment of 8% of the final value of exempted goods. The Commissioner did not adjust the credit reversed by the appellant, leading to the dispute. However, the appellant did not claim financial hardship.

Analysis:
The respondent countered by referring to Rule 6(3), stating that Modvat credit reversal is only allowed for specified goods under sub-clause (a). For other goods, sub-clause (b) mandates payment of 8% of the goods' price for clearance. Since the appellant's product did not fall under specified goods, they were required to follow Rule 6(3)(b) provisions.

Analysis:
The Tribunal considered both arguments and noted that the appellant failed to establish a strong case for unconditional stay. Rule 6 provides manufacturers with options based on goods classification under (a) and (b). If goods are specified, Modvat credit reversal is allowed; otherwise, payment of 8% is required. The Tribunal opined that if the legislature intended credit reversal for all goods, there would be no need for two clauses. Consequently, the Tribunal directed the appellant to deposit Rs. 5 lakhs within a week, rejecting the unconditional stay request.

Analysis:
The Tribunal ordered the appellant to deposit Rs. 5 lakhs within a week, after which the Revenue would release the detained goods. The case was scheduled for compliance verification and final disposal on a later date. The order was to be issued promptly.

This judgment revolves around the appellant's request to waive the pre-deposit of duty and penalty, highlighting the interpretation of Rule 6 provisions regarding Modvat credit reversal for exempted goods. The Tribunal's decision balanced the legal framework's requirements with the appellant's arguments, ultimately directing a partial deposit while maintaining the detention of goods until compliance.