1992 (5) TMI 116 - AT - Central Excise

Issues Involved:
1. Waiver of pre-deposit under Sec. 35F of the Central Excises & Salt Act, 1944.
2. Non-declaration of electric motors as a final product under Rule 57G of the Central Excise Rules.
3. Financial hardship of the applicant.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit under Sec. 35F of the Central Excises & Salt Act, 1944:

The applicants sought a waiver of the pre-deposit of Rs. 53,469.29, which was disallowed as MODVAT credit due to alleged wrong utilization by debiting RG 23-A without declaring electric motors as a final product under Rule 57G. The applicants argued that the approved classification list effective from 1-4-1990 mentioned that they would claim MODVAT credit on electric fans and electric motors. They further contended that the covering letter to the MODVAT declaration implied the availment of MODVAT for more than one finished product. The applicants highlighted their status as an SSI Unit and their financial difficulties, including a net loss of over 1.86 lakhs and reduced sales due to a major buyer not lifting the goods for several months.

The Department opposed the application, stating that the declaration on the classification list did not fulfill the requirement of Rule 57G, which mandates filing a declaration. They argued that no such declaration was filed, and the financial position of the applicants was not as bleak as claimed.

The Tribunal, after hearing both sides, concluded that the applicant had not made out a prima facie case for the grant of the waiver. They directed the applicant to deposit the MODVAT credit amount within 8 weeks, failing which the appeal would be dismissed.

2. Non-declaration of Electric Motors as a Final Product under Rule 57G of the Central Excise Rules:

The primary contention was whether the mention in the classification list regarding the availment of MODVAT credit could substitute for the requirement of a declaration under Rule 57G. The applicants argued that the classification list and the covering letter implied their intention to avail MODVAT credit for electric motors. However, the Department maintained that a specific declaration for electric motors was mandatory under Rule 57G.

The Tribunal noted that this issue could only be decided on the merits during the appeal hearing. The dissenting opinion by the Vice-President considered that mentioning the availment of MODVAT credit in the classification list could be taken into account while considering the prima facie case. The Vice-President proposed a partial waiver subject to the applicant depositing Rs. 27,000/-.

3. Financial Hardship of the Applicant:

The applicants highlighted their financial difficulties, including a net loss and reduced sales. They argued that the non-lifting of stock by a major buyer contributed to their financial hardship. The Tribunal reviewed the balance sheet, noting the firm's sales turnover and closing stock. The Tribunal concluded that the financial situation did not justify a complete waiver of the pre-deposit.

The dissenting opinion by the Vice-President considered the financial hardship and proposed a partial waiver. The Third Member, agreeing with the Vice-President, acknowledged the financial difficulties and the prima facie case, granting a partial waiver.

Final Judgment:

In view of the majority opinion, the Tribunal allowed the appellant's prayer for a waiver of pre-deposit and stay of recovery/reversal of credit, subject to the appellant depositing Rs. 27,000/- within 8 weeks from the date of receipt of the order, failing which the appeal would be dismissed without further notice.

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