1997 (5) TMI 209 - AT - Central Excise

Summary

Issues: Stay application regarding Modvat credit disallowed by authorities for failure to file a declaration regarding F.T. Rolls, pouches, vallets, etc. Financial difficulties of the appellant's sick unit and imposition of penalty.

Analysis:
The appellant, engaged in manufacturing hand tools, filed a Modvat declaration under Rule 57G for F.T. Sheetings used as packing material. Subsequently, when the supplier provided material in different forms, the Chapter Heading changed. The appellant informed the authorities about this change and filed a formal declaration. However, the authorities disallowed Modvat credit for a period due to the lack of a declaration covering F.T. Rolls. The appellant argued that they believed the original declaration covered the items, and any delay in filing should be condoned by the Assistant Commissioner (A.C.).

The appellant contended that the duty-paid material was utilized for the final product, and any discrepancy was a delay in filing, not non-filing. Additionally, the appellant's unit was classified as a sick unit, eligible for relief under the State Government's decision for rehabilitating sick units. The appellant argued that paying the amount would cause undue hardship, and there was no justification for imposing a penalty. The Department, however, opposed the appellant's prayer, citing that the F.T. Sheetings and F.T. Rolls were different articles, and no declaration was filed for the latter.

The Tribunal noted that the appellant initially declared F.T. Sheetings and later declared F.T. pouches, rolls, etc. The Tribunal acknowledged the arguable nature of the case on merits and considered the appellant's sick unit status. Taking into account the financial position and circumstances, the Tribunal granted a waiver of pre-deposit of the amount subject to the appellant depositing Rs. 20,000 within eight weeks, failing which the appeal would be dismissed. The appellant was permitted to pay the amount by adjustment in PLA/RG 23 Part II, with a compliance reporting date set for a specific future date.