SARIKA PAINTS LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS application for waiver of pre -deposit of penalty and stay recovery thereof arises out of the order of the Commissioner of Central Excise, Ahmedabad -III. In the impugned order, the Commissioner imposed a penalty of Rs. 10,00,000/ - (Rupees Ten lacs only) on the applicant for having issued modvatable invoices in order to facilitate availment of credit by the recipients. The Commissioner has demanded the credit of Rs. 1,36,00,951.82 (Rupees One crore thirty six lacs nine hundred fifty one and paise eight two only) from M/s Ajay Agrochem, who were the alleged recipients of modvatable inputs. The contention of the applicant is that no penalty is imposable on him under Rule 173Q (1) of Central Excise Rules, 1944, as he has not dealt with the goods liable to confiscation. The applicant also relied upon the decision of this Bench in the case of M/s Ekta Enterprises and Ors. - Order No. A/1596 - 1599/WZB/2004/C -I dated 21st September 2004 to argue that penalty under Rule 173Q (1) could not be imposed on him.

(2.) HEARD both sides.

(3.) PRIMA facie, it appears that applicant has aided the manufacturer in availing credit by issuing modvatable invoices. (A prima facie case of contravention of Rules has been made out against the applicant. ) We observe that in this case the dealer, who issued modvatable invoices is a related person of the manufacturer. 3. In these circumstances, it is a reasonable at this stage to conclude (that the dealer facilitating the manufacturer to take modvat credit not due.) The Page 42 applicant has not made out a prima facie case in his favour so as to waive predeposit. (We, accordingly, order pre -deposit of Rs. 2,00,000 (Rupees Two lacs only) within eight (8) weeks from the date of this order and upon such deposit, balance pre -deposit shall stand waived and recovery thereof is stayed.