2003 (3) TMI 201 - AT - Central Excise

Summary

Issues Involved:
1. Modification of earlier Stay Orders.
2. Admissibility of Modvat credit on HDPE granules.
3. Evidence of actual use of granules in manufacturing HDPE pipes.
4. Reliance on expert opinions and previous judgments.

Summary:

1. Modification of Earlier Stay Orders:
In all the Miscellaneous Applications, the appellants sought modification of earlier Stay Orders which required them to deposit a part of the confirmed demand for the purposes of Section 35F of the Central Excises Act, 1944. The appellants argued that similar issues had been resolved in their favor in previous decisions by the same Bench, thus justifying the modification of the Stay Orders. They cited several cases where Stay Orders were modified due to subsequent favorable judgments, such as ECE Industries v. CCE, E.I.D. Parry v. CCE, and others.

2. Admissibility of Modvat Credit on HDPE Granules:
The appellants, engaged in manufacturing HDPE pipes, availed Modvat credit on various grades of HDPE granules. The dispute centered on whether these granules were actually used in manufacturing the pipes as per the specifications of the Department of Telecommunication. The authorities below had issued show cause notices proposing disallowance of Modvat credit, which culminated in the impugned orders.

3. Evidence of Actual Use of Granules in Manufacturing HDPE Pipes:
The Tribunal found that the Department failed to produce evidence that the granules purchased by the appellants were sold in the market or that the granules used were purchased from exempted small-scale industries. The Tribunal noted that the Department of Telecommunication had not rejected any consignments for not meeting specifications, and expert opinions indicated that blending different grades of granules could meet the required specifications.

4. Reliance on Expert Opinions and Previous Judgments:
The Tribunal referred to expert opinions from the Central Institute of Plastics Engineering and Technology and letters from manufacturers like Reliance Industries, which supported the appellants' claim that blending various grades of granules could produce HDPE pipes conforming to specifications. The Tribunal also relied on its earlier decisions in similar cases, such as Delta Plastic v. C.C.E., and found no new arguments from the Revenue to take a different view.

Conclusion:
The Tribunal allowed all the Miscellaneous Applications, dispensing with the condition of pre-deposit of duty and penalty. It set aside the impugned orders confirming the demand of duty and imposing penalties, allowing the appeals with consequential reliefs to the appellants. The Tribunal emphasized that the Revenue's case was based on assumptions and lacked concrete evidence.