2006 (6) TMI 457 - AT - Central Excise

Summary

Issues:
1. Pre-deposit amount directed by the Tribunal and subsequent challenge in the High Court.
2. Disallowance of Modvat credit and penalty imposed.
3. Legal arguments presented by both parties regarding Modvat credit.
4. Retrospective amendment of the law regarding lapsing of credit.
5. Tribunal's analysis and decision on the Modvat credit issue.
6. Failure to point out retrospective amendment by the appellant's consultant.
7. Tribunal's decision on the pre-deposit amount based on merit and financial difficulty.

Analysis:

1. The Tribunal had directed the appellants to pre-deposit a specific amount, which was challenged in the High Court. The High Court set aside the initial order and directed the Tribunal to reconsider the waiver of pre-deposit, emphasizing the need to safeguard the revenue's interest and expedite the appeal process.

2. The appellant contested the disallowance of Modvat credit and the penalty imposed. They acknowledged other demands and indicated readiness to pay those amounts promptly.

3. The appellant's representative cited legal precedents supporting their case on the Modvat credit issue, arguing that the credit should not lapse permanently due to legal prohibitions and could be utilized later.

4. The Department highlighted the retrospective amendment of the law regarding lapsing of credit, emphasizing the changes made by the Finance Act, 1999, which affected the utilization of credit by manufacturers.

5. The Tribunal, after considering arguments from both sides, concluded that the appellants were not entitled to the credit post-abolition of the Compounded Levy Scheme due to the retrospective amendment empowering the Government to make rules for lapsing and non-utilization of credit.

6. The Tribunal expressed surprise at the appellant's failure to mention the retrospective amendment during the hearing. The appellant then volunteered to pre-deposit a lesser amount, which the Tribunal deemed insufficient to safeguard the revenue's interest.

7. Considering the lack of a prima facie case on merit but acknowledging the financial difficulty plea, the Tribunal directed the appellants to pre-deposit the original amount within a specified timeframe, aligning with the High Court's directive for expeditious appeal resolution. The case was scheduled for final hearing accordingly.