1995 (2) TMI 179 - AT - Central Excise

Summary

Issues:
1. Stay application under Section 35F of the Central Excises and Salt Act, 1944.
2. Dispensing with the requirement of pre-deposit of Central Excise duty and penalty.
3. Allegations of suppression and invocation of the extended period of limitation.
4. Classification dispute regarding inputs as 'bars' or 'flats'.
5. Modvat credit issue and restriction on credit by the adjudicating authority.
6. Pending matter before the Hon'ble Supreme Court regarding the classification of the product.

Analysis:
1. The appellant, M/s. Kushhal Fertilizers Pvt. Ltd., filed a stay application under Section 35F of the Central Excises and Salt Act, 1944, seeking to dispense with the pre-deposit of Central Excise duty amounting to Rs. 57,80,363/- and penalty of Rs. 1,50,000/- pending the appeal against the Order-in-Original dated 13-7-1994 passed by the Collector of Central Excise, Meerut.

2. The appellant's advocate argued for dispensing with the pre-deposit and stay of recovery, citing similar treatment granted to other noticees by the Tribunal in previous cases. However, the Revenue contended that the appellant had not filed a declaration and there was evidence of suppression, justifying the invocation of the extended period of limitation.

3. The Tribunal noted that while the stay applications of other noticees were decided based on the issue of limitation, the same did not automatically apply to the present appellant. The adjudicating authority had observed non-filing of a declaration by the appellant but did not find it sufficient to reject the stay application.

4. The dispute revolved around the classification of inputs as 'bars' or 'flats', with the Revenue seeking 'flats' classification while the assessees claimed 'bars'. The matter stemmed from a previous Tribunal decision classifying the product as 'bars' and a pending case before the Supreme Court. The appellant had been paying duty at the 'flat' rate under protest, leading to a discrepancy in duty payment.

5. The adjudicating authority had allowed Modvat credit to the noticees but restricted it to the lower rate applicable to 'bars' instead of the duty paid as 'flats'. This restriction on credit raised issues regarding the correct classification of the inputs and the duty payable.

6. Considering the contentious nature of the matter and the pending Supreme Court case on the classification issue, the Tribunal dispensed with the pre-deposit of duty and penalty for the appellant, directing the Revenue not to pursue recovery during the appeal's pendency to prevent undue hardship.