1995 (10) TMI 139 - AT - Central Excise

Summary

Issues Involved: Appeal against demand of duty and maintenance expenses, Prima facie case for duty demand, Compliance with deposit order, Interpretation of Section 35F of Central Excises and Salt Act, 1944, Modvat credit adjustment, Statutory deposit requirement vs. Modvat credit.

In the present case, the appeal was filed against a demand of approximately Rs. 53 lakhs for duty and Rs. 3.63 lakhs for maintenance expenses incurred by the dealers of the appellant. The Tribunal found that the appellants had made out a prima facie case for the duty demand but not for the maintenance expenses. It was noted that directing the appellants to deposit the entire duty amount and penalty would cause undue hardship. Therefore, the appellant was directed to deposit Rs. 3.63 lakhs within six weeks and report compliance to the Registry. The appellant represented that the amount had been debited and undertook to produce the certificate for complying with the stay order.

The appellant's counsel mentioned approaching the Jurisdictional Superintendent for a certificate of the debit made, which was refused by the Superintendent. The Departmental Representative justified this stance citing Section 35F of the Central Excises and Salt Act, 1944, stating that the requirement of deposit is a statutory one, separate from the Modvat credit. A decision of the Madras High Court was referenced, but it was clarified that it pertained to a different issue. The Tribunal had previously allowed pre-deposit by debiting RG-23A Pt. II and making up any shortfall by cash deposit, recognizing the distinction between statutory deposit and Modvat credit.

The Tribunal emphasized that the statutory provision for deposit existed before the Modvat credit system and should be understood in that context. It was deemed reasonable to allow the appellant to adjust the deposit amount from the Modvat credit account, up to the available credit. The Tribunal's order indicated a willingness to grant this request, considering that the adjustment would be subject to the final order of the appellate authority.

Regarding the pending appeal, it was clarified that payment adjustment would be subject to the final order to be passed. The Department was given an opportunity to confirm or deny whether the appellant had made the required debit in the Modvat account, with an adjournment granted for further information. The Tribunal aimed to ensure that neither party was adversely affected by the direction sought by the appellant.