1994 (11) TMI 278 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit and stay of recovery of duty demand, correct classification of disputed items, retrospective demand, modvat credit eligibility, procedural requirements of modvat scheme.

In this case, the appellant sought waiver of pre-deposit and stay of recovery of a duty demand amounting to Rs. 22,59,879.16 imposed by the adjudicating authority for the period from 1-8-1993 to 1-1-1994 on aluminum windows, doors, and frames designed for use in railway coaches. The appellant argued that the items should be classified under sub-heading 7610.10, covering aluminum doors, windows, frames, and thresholds, rather than under sub-heading 8607.00 as "parts of railway." The appellant contended that the Department had previously accepted their classification claim under sub-heading 7610.10, entitling them to complete duty exemption, and any subsequent change in opinion should not lead to a retrospective demand. Reference was made to correspondence and circulars supporting the historical classification. Additionally, the appellant claimed entitlement to modvat credit amounting to Rs. 18,90,968.86 for duty paid on inputs used in manufacturing the disputed items during the relevant period.

On the other hand, the respondent argued that the goods should be classified under sub-heading 8607.00 as "parts of railway," not under sub-heading 7610.10, which applies to aluminum doors and windows of structures, not those used in railway passenger coaches as in this case. The respondent relied on interpretative rules and notes to support their classification argument. Regarding the retrospective demand, the respondent contended that the law allows revision of classification lists, and demand for six months prior to the notice is valid. The respondent also raised concerns about the procedural requirements of the modvat scheme, stating that without fulfilling such requirements, modvat credit cannot be extended.

After considering the arguments, the Tribunal decided that the correct classification of the disputed items should be determined at the final hearing of the appeal, taking into account the Interpretative Rules and relevant Notes. The Tribunal acknowledged the arguability of the retrospective demand issue based on Supreme Court judgments but directed verification of the modvat claim by the jurisdictional Excise officer. The Tribunal ordered the appellant to deposit 50% of the remaining duty demand after modvat adjustment within a specified period, with the balance of the duty demand being stayed during the appeal's pendency, subject to compliance verification. Compliance was scheduled to be ascertained on a specific date.