1992 (12) TMI 121 - AT - Central Excise

Summary

Issues:
1. Appeal for waiver of pre-deposit of duty amount.
2. Eligibility for deemed Modvat Credit.
3. Interpretation of expressions "charged to nil rate of duty" and "clearly recognisable as non-duty paid."
4. Exclusion of inputs wholly exempt from duty from deemed credit order.
5. Discrimination in eligibility for credit based on source of inputs.

Analysis:

1. The case involved a Stay Petition by M/s. Associated Pigments Limited to waive pre-deposit of duty following an Order-in-Appeal confirming a previous order by the Assistant Collector of Central Excise. The Collector (Appeals) had denied them the benefit of deemed Modvat Credit, stating no credit was admissible if inputs were non-duty paid, wholly exempt from duty, or charged to nil rate of duty.

2. The Petitioners argued that their inputs, lead ingots, were not clearly recognisable as non-duty paid or wholly exempt from duty, citing conditional exemption under the relevant Notification. They contended that obtaining lead ingots directly should not deprive them of the credit available if they followed an alternate procedure involving lead scrap. They also highlighted contradictory decisions and sought a waiver of the balance amount due.

3. The Senior Departmental Representative opposed the arguments, referring to previous judgments emphasizing that inputs exempt from duty do not qualify for Modvat Credit. He clarified that the expression "wholly exempt from duty" excludes goods regardless of conditional exemptions. He dismissed the discrimination claim as hypothetical, asserting the Petitioners were not eligible for the claimed benefit.

4. The Tribunal found the Department's arguments valid, stating that previous decisions were based on different criteria and rejected the interpretation of "wholly exempt from duty" as unconditional exemption. The Petitioners were instructed to deposit the remaining amount within two months, as their prima facie case was not established, and the plea of hardship lacked substantiation. The stay was declined, and compliance was scheduled for a future date.

This judgment clarifies the eligibility criteria for deemed Modvat Credit, emphasizing the exclusion of inputs wholly exempt from duty. It also addresses the interpretation of key expressions and dismisses claims of discrimination based on the source of inputs. The decision underscores the importance of complying with duty requirements and the need to establish a prima facie case for seeking waivers in such matters.