9911796707
TMI Blog1997 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... b work basis after which BSL supplies the complete seats to MUL who uses it in the manufacture of their motor vehicles. 2.Prior to 21st January, 1989 parts of seats used to be physically transported by BSL to MUL under a gate pass. MUL availed Modvat credit on the basis of these passes. Thereafter the parts were physically re-supplied to BSL under the procedure for the purpose of sending inputs to job works as per Rule 57F(2) of the Central Excise Rules (for short referred to as `the Rules' hereinafter). It is, however, not in dispute that for the period after 21st January, 1989 which is the relevant period in these petitions, parts of seats did not physically move from factory of BSL to that of MUL. Therefore, the question of physical mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Against BSL the duty demand is Rs. 25,45,78,948/- besides penalty of Rs. 5 crores. These duties have been demanded by way of recovery of wrongfully availed `Modvat' credit. 5.MUL and BSL have filed appeals against the order of adjudication dated 15th December, 1993 passed by Commissioner of Central Excise. The appeals are pending before Customs, Excise Gold (Control) Appellate Tribunal (CEGAT). On the stay applications filed along with the appeals under Section 35F of Central Excises and Salt Act the Tribunal has directed that the appeal of MUL be heard on deposit by MUL of Rs. 20 crores on or before 15th October, 1996 which may be done by reversal of credit in the Modvat credit register and on compliance of the order of deposit, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n those parts as they are exempt under the Notification. According to the department, as a further consequence BSL was not entitled for Modvat credit of excise duty paid on the raw materials used by it in the manufacture of parts of seats. 9.The stand of MUL in brief is that it does not have any in-house facility for manufacture of seats; BSL is manufacturing seats exclusively for motor vehicles manufactured by MUL; the seat assembly consists of three essential parts - trimsets, steel frames and PU foam paddings and these three parts are first manufactured by BSL which pays duties on these parts under the relevant tariff heading and then these parts are sold to MUL. The parts are thereafter re-issued by MUL to BSL for manufacture of seats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time the Tribunal has noticed the fact that BSL had also been found to issue gate passes showing the consignee as MUL when in fact there was no clearance of goods outside their factory at all. In view of this factual position the Tribunal balanced the equities by directing the deposit of about 20% amount by BSL. 10.It has been vehemently contended on behalf of the respondents that petitioners maintained record only in a make belief manner so as to appear to have complied with the provisions of law. It was submitted that the fact of MUL not actually receiving the inputs and not clearing the same from their factory was not brought to the notice of the Central Excise Department. Even in the purchase orders by BSL against entry "freight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of manufacture is undertaken by BSL shows that the documents are being created with a view to show movement of parts between MUL and BSL, though nothing is required to be done to the parts by MUL. According to the Department the object of making aforesaid documents is to avail Modvat to which MUL was not entitled. 11.Since the appeals against the order of adjudication are pending before the Tribunal we would refrain from expressing any opinion on the merits of the controversy lest it may prejudice the case of any of the parties before the Tribunal. The Tribunal has found that the petitioners have a prima facie case. There is no doubt that the points are arguable. Section 35F vests in the Tribunal a discretion to make an appropriate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... results in undue hardship to a person this Court has ample power to interfere in exercise of its jurisdiction under Article 226 of the Constitution though not as an Appellate Court. 12.In the present case, the Tribunal after coming to the conclusion that the appeals raise arguable points has balanced the equities keeping in view the stand of the Excise Department which will also have to be given a serious consideration when the appeals are heard and decided. In the case of MUL, on consideration of entire facts and circumstances the Tribunal has directed deposit of an amount which is little less than 50% of the total amount of duty demanded and penalty and in case of BSL it is less than 20%. We are unable to accept the contention that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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