CEAT LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE stay application was heard for some time and thereafter the Bench felt in view of the directions given by the Bench by its Misc. Order No. M/192/97 -NB, dated 3 -10 -1997 and detailed note order dated 9 -1 -1998, the stay application would be allowed by dispensing with the pre -deposit and the appeal itself to be taken up for disposal, as the matter lies in a short compass.

(2.) BY Show cause notice dated 5 -1 -1995, the appellants were called upon to explain as to why Modvat credit of Rs. 3,55,02,000/ - should not be disallowed and recovered from them under Rule 57 -I, of C.E. Rules, 1944. The reasons given are that during the scrutiny of the records of the appellants for the months of July, 1994 to Oct., 1994 it revealed that they had availed and utilised the Modvat credit wrongly on input 'Caprolactum' to the extent of the amount already indicated on the basis of invoices issued by Marketing Division of Gujarat State Fertilizers Company Limited, Laxmi Ganj Mandi, Gwalior (depot of the supplier) and Depot of M/s. Fertilizers and Chemicals Travancore Limited; who are not registered with the Central Excise Department. It was also alleged in the show cause notice that the documents listed at S. No. 1 to 320 (Total 320) in Annexure -A of the show cause notice are inputs on which credit taken by the Noticees did not appear to be valid documents for availment of Modvat credit under Rule 57G of C.E. Rules, 1944, as these invoices are issued by the Depots of Gujarat State Fertilizers Limited and Fertilizers and Chemicals Travancore Limited, who are not registered with the Central Excise Department as required in terms of Notification No. 33/94 -C.E. (N.T.), dated 4 -7 -1994 (inserting Rule 57GG in Central Excise Rules, 1944). It was also alleged that these invoices are also not containing the details as required under the Notification No. 32/94 -CE. (N.T.), dated 4 -7 -1994.

(3.) THE appellants resisted the claim and they have stated in a great detail as to how their claim cannot be denied. They had stated that both the suppliers of inputs namely GSFC and FACT hat got themselves registered with the Department under Rule 57GG prior to 31 -12 -1994 as per Notification No. 64/94, dated 7 -11 -1994 and hence the Modvat credit should be regularized in terms of Notification No. 64/94. In this regard, they relied on the Tribunal's judgment rendered in the case of EMC Steels Ltd. v. CCE as reported in 1993 (44) ECR 215 which held that Rule 57H does not stipulate any condition of taking prior permission in one way and there is no dispute regarding duty paying character of such input. The Commissioner after hearing did not accept their plea and has conferred the duty and has also imposed the penalty of Rs. 35 lakhs.