2000 (11) TMI 734 - AT - Central Excise

Summary

Issues:
1. Dispensation with the condition of pre-deposit of duty
2. Eligibility to avail Modvat credit
3. Imposition of personal penalty
4. Barred by limitation

Dispensation with the condition of pre-deposit of duty:
The appellant sought dispensation with the pre-deposit of duty amounting to Rs. 60,77,22,197 confirmed against them for denying Modvat credit on imported kerosene oil blended with indigenous kerosene oil, contending that blending did not constitute manufacturing. The Revenue objected to the credit availed by the appellants post the extension of the Modvat scheme in 1994, despite no prior objections when duty was paid on the final product. The Tribunal noted the Revenue's silence on the duty paid on the final product and highlighted the Supreme Court's stance on not depriving entitled benefits by misinterpreting notifications.

Eligibility to avail Modvat credit:
The appellants argued that they had permission for blending activities before the Modvat scheme extension and had filed a declaration under Rule 57G upon its implementation. The Revenue challenged the manufacturing status of the blending activity, leading to the denial of Modvat credit. The Tribunal observed the Revenue's delayed objection after five years and questioned the justification for the delayed challenge, indicating a favorable view towards the appellant's case on the limitation issue.

Imposition of personal penalty:
Apart from contesting the order on merits, the appellants raised the issue of limitation, highlighting that a significant portion of the demand was time-barred. The appellants emphasized that the Revenue's allegation of misdeclaration and suppression lacked merit, especially considering the declaration made under Rule 57G. The Tribunal acknowledged the appellants' argument on limitation and allowed the stay petition unconditionally, indicating a strong stance in favor of the appellants on this issue.

Barred by limitation:
The appellants contended that a major part of the demand was time-barred as the show-cause notice was issued after a significant period from the relevant period. The Tribunal scrutinized the adjudicating authority's finding on limitation, noting the declaration under Rule 57G and the Revenue's delayed objection. The Tribunal leaned towards the appellants' argument, suggesting a strong case on the limitation aspect and allowing the stay petition while fixing the main appeal date.

This comprehensive analysis of the judgment delves into the issues of dispensation with pre-deposit of duty, eligibility for Modvat credit, imposition of personal penalty, and the limitation aspect, providing a detailed insight into the arguments presented by both parties and the Tribunal's considerations in reaching its decision.