1996 (2) TMI 281 - AT - Central Excise

Summary

Issues:
Dispensation of pre-deposit of duty under Notification 202/88.

Analysis:
The case involved an application seeking dispensation of pre-deposit of duty amounting to Rs 78,24,665 demanded from the applicants under Notification 202/88. The applicants claimed entitlement to the benefit of the said Notification for inputs used in manufacturing steel tubes. The Counsel argued that the applicants cleared some tubes for consumption captively under the exemption notification while others were cleared on payment of duty. It was contended that the MODVAT Credit was reversed subsequent to the clearance of tubes for captive use, as per the instructions of the Board. The Counsel referred to a Supreme Court ruling to support their argument that reversal of credit before or after clearance should not affect the entitlement to the benefit of the Notification.

The Departmental Representative adopted the reasoning of the lower authority, emphasizing the MODVAT Credit had not been reversed for inputs used in tubes cleared under exemption.

The Tribunal observed that MODVAT Credit had been taken for inputs used in manufacturing the tubes, and the credit had not been reversed at the time of clearance under exemption. The Tribunal found that the condition precedent for availing the Notification benefit had not been satisfied. Despite the Counsel's arguments about the financial position of the applicants, the Tribunal directed a pre-deposit of 50% of the duty demanded with a Bank guarantee for the remaining amount by a specified date. The Tribunal granted a stay of recovery pending compliance and scheduled a follow-up hearing for compliance reporting.

In conclusion, the Tribunal found no infirmity in the lower authority's reasoning and directed the applicants to make a pre-deposit of 50% of the duty demanded under Notification 202/88.