JAGANNATH STEEL (P) LTD. Vs. C.C.E

JUDGEMENT

(1.) THIS appeal is directed against the Order -in -Appeal dated 24.9.2003 wherein it was held that the appellants are liable to pay duty on the inputs lying in stock as on 1.8.1997.

(2.) THE relevant facts that arise for consideration are that the appellants are manufacturers of M.S. Ingots and Billets falling under Chapter 72. The appellants were availing Modvat benefit. From 1.8.97 the appellants' products got covered under Section 3A of the Central Excise Act which was further compounded levy scheme on the goods manufactured by the appellants. The Central Government by notification No. 33/97 dated 1.8.97 amended Rule 57F(17) of the Central Excise Rules, 1944 which disallowed the Modvat Credit allowing unutilized inputs as on date i.e. 1.8.97. The appellants were issued show cause notice asking them to show cause as to why an amount of Rs. 6,46,771/ - be not demanded from them for the inputs lying in stock in finished goods and W.I.P. The appellants contested the show cause notice. The adjudicating authority vide his Order -in -Original dated 19.11.99 confirmed the demand and also imposed equivalent amount of penalty. On an appeal the appellate authority upheld the Order -in -Original to the extent of duty demand but reduced the penalty to Rs. 10,000/ -. Hence, this appeal.

(3.) HEARD both sides, considered the submissions and perused the records. I find that show cause notice has been issued on a ground which is not correct in law. The relevant portion of the show cause notice is found in para 3 which is reproduced below: