1999 (10) TMI 71 - HC - Central Excise

Summary

Issues:
1. Interpretation of Rule 57-F(1) of the Central Excise Tariff Act, 1985 regarding the use of inputs in manufacturing final products.
2. Allegation of contravention of Rule 57-F (i) & (ii) by removing products at an intermediate stage instead of the input stage.
3. Consideration of financial position in deciding on a stay-cum-waiver application.
4. Compliance with Rule 57-G of the Central Excise Rules regarding the declaration of final products.
5. Application of Section 11-A of the Central Excise Act on the limitation period for serving a notice.

Analysis:
1. The petitioner, a manufacturer of leaf springs & coil springs, alleged that the demand notice issued for wrongly utilizing Modvat Credit was based on incorrect grounds. The Assistant Commissioner confirmed the demand and imposed a penalty, misinterpreting the general permission granted for removing inputs. The petitioner appealed to the Commissioner (Appeals) along with a stay-cum-waiver application, which was rejected without proper consideration of the financial position.

2. The respondent argued that the petitioner contravened Rule 57-F(i)(ii) by removing products at an intermediate stage, leading to non-compliance with Rule 57-G for declaration of final products. The respondent contended that general permission for removal of intermediary goods was not permissible under the rules, emphasizing financial stringency under Section 35-F of the Central Excise Act for waiving pre-deposit requirements.

3. During the hearing, the petitioner's counsel emphasized compliance with excise duty payment and obtaining general permission before removal of goods. The petitioner's financial condition was supported by a balance sheet, which was not adequately considered in the impugned order. The respondent argued that misrepresentation in removal of goods extended the limitation period under Section 11-A, which was not raised earlier in the proceedings.

4. The Court noted the technical nature of the default by the petitioner, as the excise duty was paid before removal of goods, and there was no loss of revenue. The Commissioner (Appeals) failed to consider these aspects while rejecting the stay-cum-waiver application. The Court found that the application should have been allowed, especially considering the technical nature of the issue and the petitioner's compliance with payment and permissions.

5. Ultimately, the Court allowed the petition, modifying the impugned order to grant the Waiver-cum-stay application. The realization of excise duty and penalty was stayed pending appeal disposal, with directions for expeditious resolution. No costs were awarded in this judgment.