2000 (11) TMI 397 - AT - Central Excise

Summary

Issues:
Central Excise duty demand, Modvat Credit disallowed, penalty imposition, Compounded Levy Scheme applicability, exemption under Notification No. 67/95-C.E., Modvat Credit on inputs, captively consumed goods, deemed Modvat Credit, intermediate products, stay petition, pre-deposit of duty and penalty.

Analysis:

The case involves a dispute over Central Excise duty demand of Rs. 75,07,183/-, including disallowed Modvat Credit of Rs. 55,93,105/- and a penalty imposed on M/s. Shree Laxmi Iron & Steel Works Private Limited for manufacturing railway track construction materials. The issue revolves around the classification of intermediate products, hot re-rolled non-alloy steel, under the Compounded Levy Scheme and the denial of exemption under Notification No. 67/95-C.E. The Revenue contends that these intermediate products are covered by the Scheme, leading to duty confirmation and penalty imposition.

The Advocate for the applicants argues against the applicability of the Compounded Levy Scheme to captively consumed intermediate goods used in manufacturing final products. He asserts that even if Modvat Credit on inputs related to intermediate goods is disallowed, deemed Modvat Credit should be allowed. Additionally, he claims that the exemption under Notification No. 67/95-C.E. should apply, and Modvat Credit on paid duties should not be disallowed, as no independent material goods were produced during manufacturing.

On the other hand, the Revenue representative supports the duty and penalty imposition based on the impugned order, opposing the applicant's request for stay and pre-deposit waiver. The Tribunal, after considering both parties' arguments, finds the issues raised to be contentious and not strong enough to warrant a complete waiver of pre-deposit. Consequently, the Tribunal orders the applicants to deposit Rs. 25,00,000/- within two months. Upon payment, the balance duty and penalty are stayed, with no recovery by the Revenue during the appeal's pendency, scheduled for compliance on 19th January 2001.

In conclusion, the Stay Petition is allowed with the condition of depositing Rs. 25,00,000/- within two months, ensuring the balance duty and penalty remain stayed pending the appeal process, thereby providing a temporary relief to the applicants.