1993 (9) TMI 212 - AT - Central Excise

Summary

Issues involved: Stay application, Modvat Credit disallowance, Debit entries in accounts, Interpretation of Central Excise Rules.

The Applicants filed Miscellaneous Applications and Stay Applications seeking early hearing and consideration of their Stay Petitions despite the recovery of demanded amounts by the department. The High Court observed that recovery by the department does not bar the Tribunal from considering the Stay Application. The Applicants argued that the Collector's orders disallowing Modvat Credit were based on a wrong understanding of Rule 57C of the Central Excise Rules, as their final product was not wholly exempt from duty or chargeable to nil rate of duty. They cited relevant legal authorities to support their case and contended that Rule 57-I did not apply to their situation. The learned Consultant also referred to a judgment stating that the proper Officer cannot make debit entries in the accounts.

The Departmental Representative contested the arguments, stating that the duty credit earned on inputs used in the manufacture of final products for export under bond could only be utilized if the final products themselves were exported under bond. The Tribunal, after considering the submissions and record, disagreed with the Collector's interpretation, citing judicial precedents and government instructions. They clarified the understanding of Rule 57F and ruled in favor of the Applicants, granting waiver of predeposit of the disputed Modvat Credit amount.

A similar Stay Order from the North Regional Bench was submitted, supporting the arguments made by the Applicants. The Tribunal directed the department to recredit the recovered amount to the Applicants' account for utilization under Rule 57F. They emphasized the importance of restoring the credit for the grant of stay to be meaningful, as seen in previous cases. The Appeal was scheduled for a hearing on a later date.