1998 (3) TMI 268 - AT - Central Excise

Summary

Issues:
Dispensing with pre-deposit of duty based on deemed Modvat credit for re-rollable material obtained from railways.

Detailed Analysis:

The judgment in question pertains to 11 applications filed seeking dispensation with pre-deposit of duty due to the disallowance of deemed Modvat credit on re-rolling material obtained from the railways. The lower authorities contended that the re-rollable material purchased by the applicants, being old and used, cannot be considered as duty paid. The advocate for the applicant argued that the government order on deemed Modvat credit does not impose any condition on the payment of duty. He cited relevant government orders and tribunal decisions to support his contention that the material should be presumed as duty paid, thus justifying the dispensation of pre-deposit.

The respondent, opposing the request for dispensing with pre-deposit, referred to a tribunal decision emphasizing that goods should have paid duty, and since the material in question was discarded and used, the duty was not paid, making it ineligible for deemed Modvat credit. The respondent also cited another tribunal decision to support the argument that duty paid character of inputs cannot be dispensed with, even for deemed Modvat credit situations. The respondent urged for the deposit of the entire duty amount based on these arguments.

After considering the submissions from both sides and reviewing relevant case law, the tribunal noted the central issue revolving around the interpretation of government orders concerning deemed Modvat credit. The tribunal specifically focused on the government order dated 12-7-1990, which, according to the counsel for the applicants, did not mention any requirement for the payment of duty but only specified three conditions for availing deemed Modvat credit. The tribunal acknowledged the existence of differing views on the matter but ultimately decided to dispense with the pre-deposit of duty. However, considering the substantial revenue involved, the tribunal directed the early listing of the appeals for hearing and stayed the recovery of penalty during the appeal process. The matter was scheduled for hearing on 6-4-1998.