1997 (7) TMI 301 - AT - Central Excise

Summary

Issues:
Stay application against Commissioner's order denying Modvat credit for purchased machines; Allegations of ineligibility due to goods received before registration; Dispute over definition of capital goods; Balance sheet and Profit and Loss Accounts as evidence; Prima facie assessment by Tribunal.

Analysis:
The case involves a stay application challenging the Commissioner's order regarding Modvat credit denial for machines purchased by the appellants, who are hand tool manufacturers. The appellants registered with Central Excise in December 1994 and faced allegations of ineligibility for credit due to goods being received before registration and not meeting the capital goods definition. The Commissioner upheld the denial, prompting the appeal. The appellants argued that their factory came into existence only upon registration, justifying the delay in filing certain declarations. They emphasized their financial records, including balance sheets and profit/loss accounts, to support their case.

The Department, represented by the Learned DR, cited Central Excise Act provisions and capital goods definitions to justify the denial of Modvat credit. They highlighted the early receipt and installation of goods, lack of timely declarations, and non-conformance of items with the capital goods definition. The Department also questioned the adequacy of the financial evidence presented, pointing out that the balance sheet was outdated and did not demonstrate potential hardship if the amount in question had to be deposited.

Upon considering the submissions, the Tribunal, presided by Shri S.K. Bhatnagar, noted the strength of the appellant's case regarding the goods received before registration, supported by production certificates and declaration filings. The Tribunal found some items to potentially qualify as capital goods, while others remained debatable. The Tribunal acknowledged the financial losses shown in the profit/loss accounts but required the latest balance sheet for a complete assessment. Ultimately, the Tribunal decided to grant a stay on the recovery of the disputed amount pending the appeal, subject to the appellants depositing Rs. 5,000 within 8 weeks, based on the totality of facts and circumstances presented.