2004 (12) TMI 578 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty based on Modvat credit denial for items used in manufacturing cable filling compound.

Analysis:
The judgment pertains to applications seeking waiver of pre-deposit of duty and penalty amounting to Rs. 61,19,774/- confirmed against the applicants along with additional penalties imposed on specific individuals. The demand arose due to the denial of Modvat credit for Pentaerythritol and Atatic PP Copo, as the adjudicating authority held that these items were not used in manufacturing the final product, cable filling compound.

Upon hearing both sides, the Tribunal considered the previous remand where the Chemical Examiner clarified that "polyethylene polymer" includes co-polymer, indicating the use of Atatic PP Copo in the final product. However, regarding Pentaerythritol, the Chemical Examiner's statement only suggested possibilities without concrete evidence of its use. The Tribunal noted the significant amount of credit denied for Pentaerythritol, approximately Rs. 40 lakhs, but found the evidence insufficient to establish prima facie use by the applicants. As the matter is debatable and requires a final hearing for a conclusive decision, the Tribunal concluded that no prima facie case existed for a total waiver.

Furthermore, the Tribunal highlighted that the plea of limitation could only be examined during the final hearing, and no prima facie case on the ground of limitation was established. Consequently, the Tribunal directed a pre-deposit of Rs. 8 lakhs within 8 weeks towards duty. Upon this deposit, the pre-deposit of the remaining duty and penalties for the applicants would be waived, and recovery stayed pending the appeals. Failure to comply with this directive would result in the vacation of stay and dismissal of the appeals without prior notice, with compliance to be reported by a specified date.

In conclusion, the judgment addresses the denial of Modvat credit for specific items used in manufacturing, the evidentiary requirements for establishing prima facie cases, considerations for waiver of pre-deposit, and the procedural aspects related to compliance and appeal proceedings.