2005 (3) TMI 653 - AT - Central Excise

Summary

Issues:
1. Eligibility for Modvat credit on Tarpaulin under Chapter Heading 63 of the Central Excise Tariff.

Analysis:

The case involved an application by M/s. SRF Ltd. for waiver of pre-deposit of central excise duty amounting to Rs. 12,24,357/-, which was disallowed Modvat credit on Tarpaulin classifiable under Chapter Heading 63 of the Central Excise Tariff. The appellant argued that there had been a long-standing dispute regarding the classification of Tarpaulin under Chapter Heading 39 or Heading 63. They contended that they had paid excise duty under Chapter 39, and the excess money paid was with the department, thus they should not be required to make any pre-deposit. On the other hand, the respondent, Smt. Bhagya Devi, opposed the prayer, stating that Tarpaulin was classifiable under Chapter Heading 63 and not covered under the provisions of Modvat Rules during 1992-1995, making the disallowance of Modvat credit appropriate.

The Tribunal considered the submissions from both sides and deliberated on the issue of whether the applicants were eligible for Modvat credit on the duty paid on inputs used for manufacturing Tarpaulin. The learned Advocate argued that the classification of Tarpaulin under Chapter Heading 63 had been determined, and Modvat credit provisions were not applicable during the relevant period. The Tribunal found that the applicants had not established a prima facie case in their favor for the waiver of the entire duty and penalty amount. Consequently, the Tribunal directed the applicants to deposit a sum of Rs. 3,00,000/- lakhs within six weeks. Upon compliance with this direction, the pre-deposit of the remaining amount would be waived, and the recovery thereof stayed during the appeal's pendency. The Tribunal scheduled a compliance reporting on 26-4-2005.

In conclusion, the judgment clarified the eligibility for Modvat credit on Tarpaulin under Chapter Heading 63 of the Central Excise Tariff. The Tribunal ruled that the applicants were required to make a partial deposit of the disputed amount while waiving the pre-deposit of the remaining sum, with recovery stayed during the appeal process.