2014 (3) TMI 86 - AT - Central Excise

Waiver of pre-deposit - cenvat / modvat credit - allegation of clearing S.S.Billets by mis-declaring the same as OAS billets with intent to evade the payment of duty - allegation of under valuation in respect of S.S. Billets - allegation of taking Modvat Credit without actual receipt of input - Held that - from a number of test reports of the CRCL in respect of the samples drawn during the period of dispute from the goods declared as OAS Billets it is seen that the Chromium content of the steel was more than 10.5%, while in terms of Chapter Note 1(f) to Chapter 72 the Chromium content of Other Alloy Steel is required to be 0.3% or more but less than 10.5%. Therefore it cannot be said at this prima facie stage that the decision of the case is likely to result in exoneration of the Appellant on this court. Regarding undervaluation - as prima facie for March 94 to Nov. 95 period, there is no justification for drastic reduction in the price of SS Billets when the price of down street production S.S Flats and SS Pattas/Pattis had not decreased and there was no reduction in the price of SS Billets manufactured by other manufacturers. It cannot be said that the appellant have been such a strong prima facie case in their favour which is likely to result in their full exoneration. - appellant directed to pay an amount of ₹ 3 Crore within a period of eight weeks. - stay granted partly.

Summary

Issues Involved:
1. Mis-declaration of Stainless Steel Billets as Other Alloy Steel Billets.
2. Under-valuation of Stainless Steel Billets.
3. Wrong availment of Modvat Credit.

Issue-wise Detailed Analysis:

1. Mis-declaration of Stainless Steel Billets as Other Alloy Steel Billets:
The appellant was accused of clearing Stainless Steel Billets (S.S. Billets) by mis-declaring them as Other Alloy Steel Billets (OAS Billets) to evade duty. The period in question is from 05.08.93 to Feb.94 and from March94 to July94. The duty evasion was based on the chromium content in the billets, which according to the Central Revenue Control Laboratory (CRCL) test reports, was 10.5% or more, categorizing them as stainless steel. The appellant contested the reliability of the CRCL test reports and argued that the Tribunal's directions for re-testing were not complied with. However, the Tribunal found that the evidence on record, including multiple CRCL test reports, indicated that the billets had chromium content exceeding 10.5%, which prima facie supported the Department's case of mis-declaration.

2. Under-valuation of Stainless Steel Billets:
The second issue was the alleged under-valuation of S.S. Billets during the period from March94 to 10.11.95. The Department claimed that the appellant reduced the ex-duty price of S.S. Billets without justification, despite the prevailing market prices being higher. The Department relied on statements from buyers and other manufacturers indicating higher market prices. The appellant argued that the price reduction was known to the Department through filed price lists and RT-12 returns, and that the assessment was provisional. They also contended that the comparison with other manufacturers' prices was invalid without verifying the material characteristics. The Tribunal noted that there was no justification for the drastic reduction in prices when the prices of downstream products and S.S. Billets from other manufacturers did not decrease. Therefore, the appellant did not have a strong prima facie case in their favor regarding the under-valuation allegation.

3. Wrong availment of Modvat Credit:
The third issue involved the wrong availment of Modvat Credit amounting to Rs.1,00,40,124/-. The Department alleged that the appellant took credit without actual receipt of inputs and on the basis of invalid documents. The appellant argued that the inputs were received either directly or through their godown, and all payments were made through the bank. They also claimed that the Department had verified the documents and found no discrepancies. However, the Tribunal found that the nature of the evidence required an in-depth examination and could not be summarily dismissed.

Conclusion:
The Tribunal concluded that the appellant did not have a strong prima facie case likely to result in full exoneration. Therefore, a total waiver of pre-deposit was not granted. The Tribunal directed the appellant to deposit Rs. 3 Crore within eight weeks, failing which the appeal would not be maintainable. This deposit was considered necessary to safeguard the interests of the Revenue, given the serious allegations of duty evasion and fraud.