2002 (1) TMI 161 - AT - Central Excise

Summary

Issues involved: Application for dispensing with pre-deposit of duty amount and penalty amount based on availing Modvat credit, interpretation of Notification No. 5/94-C.E. (N.T.), dispute over the quantum of Modvat credit, reliance on the decision of the Larger Bench of the Tribunal in a similar case, financial hardship plea.

Analysis:

1. The application sought dispensation of the pre-deposit of duty amount and penalty amount. The appellants had availed Modvat credit based on invoices issued by a 100% EOU, where discrepancies arose in the quantum of Countervailing Duty (CVD) paid and the credit availed by the appellants. The Assistant Commissioner upheld the duty and penalty amounts, leading to an appeal against this decision.

2. The Commissioner (Appeals) opined that the credit should be based on the duty actually paid by the 100% EOU, as per the provisions of relevant Notifications, and not on a flat percentage as contended by the appellants. This decision was challenged by the appellants, citing a precedent from the Larger Bench of the Tribunal in a similar matter, where the issue was resolved in favor of the appellants.

3. Upon reviewing the Larger Bench decision, it was noted that the determination of Modvat credit from goods procured from a 100% EOU involved calculating the additional duty of Customs leviable on similar imported goods and comparing it to the actual duty paid by the 100% EOU. The Tribunal accepted the formula proposed by the advocate, emphasizing that credit should be limited to the actual duty paid by the 100% EOU. Consequently, the Tribunal found that the appellants did not have a strong case to unconditionally allow the stay petition, despite their plea of financial hardship.

4. Considering the facts and circumstances, the Tribunal directed the appellants to deposit a specified amount within a stipulated timeframe, with the condition of pre-deposit of the balance duty and penalty amount being waived and its recovery stayed during the appeal process. Compliance with this order would lead to the appeal being taken up for further consideration on a specified date.

This detailed analysis of the judgment highlights the issues, arguments, legal interpretations, precedents, and the final decision rendered by the Tribunal in a comprehensive manner.