2000 (5) TMI 382 - AT - Central Excise

Summary

Issues:
1. Pre-deposit requirement of duty amount and penalty.
2. Dispute regarding utilization of credit under the Modvat scheme.
3. Interpretation of Rule 57F(12)(c) and the proviso to Rule 57F(12).
4. Legal correctness of the impugned order.
5. Applicability of the Modvat scheme provisions.

Analysis:

1. The judgment dealt with the requirement for the appellants to pre-deposit a substantial duty amount and penalty following an order by the Commissioner of Central Excise. The order was based on the alleged wrong utilization of credit of additional excise duty on unprocessed tyrecord fabrics by the appellants.

2. The dispute centered around the utilization of credit under the Modvat scheme by the appellants. The appellants argued that the grey fabrics, whether procured from the market or manufactured internally, qualified as inputs under Rule 57A. They contended that the clearance of such inputs for home consumption after availing duty credit was governed by Rule 57F(12)(c). The Tribunal found merit in the appellants' argument, emphasizing that the source of receipt of inputs was immaterial as long as credit was rightfully availed.

3. The Tribunal analyzed Rule 57F(12)(c) and the proviso inserted w.e.f. 1-3-97, noting that the proviso allowed for the utilization of credit towards payment of duty on any final product. The Tribunal agreed with the appellants' advocate that the proviso did not mandate a one-to-one correlation, supporting the appellants' stance that the credit had been correctly utilized by paying duty on cleared goods.

4. The Tribunal scrutinized the impugned order and found that it made a technical distinction between bought out tyrecord fabrics and duty paid grey fabrics. The Tribunal observed that both types of inputs qualified as inputs under Rule 57A and that the dispute essentially revolved around the clearance of duty-credited inputs for home consumption. The Tribunal opined that the appellants had a strong case on the merits of the issue, indicating that the impugned order's technical distinction was not legally correct.

5. Considering the prima facie merits of the appellants' case, the Tribunal granted full waiver of the pre-deposit of duty and penalty amounts, staying the recovery during the appeal's pendency. The Tribunal acknowledged the strength of the appellants' arguments regarding the application of the Modvat scheme provisions and ruled in favor of the appellants.