2004 (3) TMI 258 - AT - Central Excise

Summary

Issues:
Appellants seeking waiver of pre-deposit for Cenvat credit disallowed and penalty, interpretation of duty payment on job work processed materials.

Analysis:
The appellants in this case sought a waiver of pre-deposit amounting to Rs. 34,427 for Cenvat credit disallowed and requested dispensation of penalty of an equivalent sum. They were engaged in job work for principal manufacturers, processing wire rods by softening and cold drawing, and returning the processed materials to the principals without duty payment. The appellants utilized duty paid materials like LDO, Wire Drawing Powder, Grinding wheels, and Phosphate Chemicals as consumables, claiming Modvat credit. The department contended that since the dispatches through job work were duty-free, the appellants should reverse the credit of duty paid on the inputs in the material sent out under the job work procedure.

The appellants relied on judgments of CEGAT in cases involving Bajaj Tempo Ltd. and Jindal Polymers, arguing that goods cleared under job work procedures do not become nil rate or exempted goods, as they are required to be cleared from the principal manufacturer's premises with appropriate duty payment. The Member (T) noted the strong prima facie case made by the appellants in their favor to waive the pre-deposit of the entire amount.

Consequently, the Member (T) decided to waive the pre-deposit of the total duty and penalty amount, staying their recovery until the case's final disposal. The case was scheduled for regular hearing on 3-5-2004.