1998 (3) TMI 246 - AT - Central Excise

Summary

Issues:
Stay petitions for dispensing with pre-deposit of duty and penalty imposed in the impugned order.

Analysis:
The case involved two stay petitions filed by M/s. Rajendra Steels Limited and M/s. Rajendra Pipes Limited regarding the pre-deposit of duty and penalty imposed on them. The applicants were engaged in the manufacture of black pipes and galvanized steel tubes using raw materials like HR Coils, CR Coils, and Zinc ingots. Discrepancies were found in the records of both companies related to coils and ingots during specific periods. The Commissioner of Central Excise disallowed Modvat credit and imposed penalties on the companies. The applicants argued that the offloading of goods in the premises of the other unit was due to the same Group's administration and was a procedural lapse. The Commissioner confirmed the demands and penalties, specifying the amounts to be recovered from each company.

The applicants contended that the offloading of goods in the other unit's premises was a technical lapse and that the goods were used for manufacturing the final product by the unit in whose name the documents were consigned. The Commissioner disallowed the Modvat credit and imposed penalties on both companies. The applicants had already deposited a significant sum during the investigations. The Commissioner's decision was based on the illegal taking of credit without receiving the goods and diverting goods to another unit without reversing the credit of duty taken on the inputs.

The Tribunal noted that the diversion of goods for taking Modvat credit was not disputed. The major duty demand was related to goods kept in the other unit's premises while the credit was taken by the unit in whose name the documents were. The Tribunal found the first issue arguable as there was no evidence of the goods being used or diverted to the other unit. Considering the facts, evidence, and submissions, the Tribunal dispensed with the pre-deposit of duty and penalty, provided the already deposited amounts were not withdrawn. The recovery of duty and penalty was stayed pending the appeal hearings, with the option for early hearing due to the substantial stakes involved.

In conclusion, the stay petitions were disposed of with the condition that the pre-deposit amounts already made would remain, and the recovery of duty and penalty was stayed during the appeal process. Both parties were allowed to request an early hearing if needed due to the significant implications of the case.