DIESEL LOCOMOTIVE WORKS Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) DEEMED credit of Rs. 18,53,225.18 availed by the applicants herein during the period from September 5,1988 to 1 -3 -1990 on steel plates and steel sheets has been directed to be recovered from them under the proviso to Rule 57 -1 of the Central Excise Rules read with the proviso to Section 11A of the Central Excise Act. A penalty of Rs. 50,000/ - has also been imposed under Rule 173Q of the Central Excise Rules. The show cause notice proposed recovery of wrongly availed credit on the ground that they did not produce documents evidencing payment of duty on the plates and sheets produced by them. The adjudicating authority has confirmed the demand on the ground that no declaration was filed for steel sheets as inputs, and on the ground that steel plates are not specified as inputs in Board's Order No. F. No. 342/1/88/TRU, dated 1 -3 -1989 and 1 -6 -1989.

(2.) ON hearing both sides, we find prima facie substance in the contents of the applicants that the deemed credit order dispenses with the requirement of production of duty paying documents and that the adjudication order has travelled beyond the show cause notice inasmuch as confirmation of duty is on the grounds not raised in the show cause notice. The applicants have also a strong case on limitation in view of the fact that the show cause notice dated 26 -7 -1991 has been issued beyond a period of six months from the relevant date in terms of Rule 57 -1 as prima facie there is no suppression of any material facts so as to warrant invoking of the extended period of limitation. The contention of the learned DR that credit has been rightly denied since the applicants did not file any documents evidencing purchase of the inputs in question is prima facie not tenable as the Department does not dispute receipt of the disputed inputs by the applicants during the relevant period.

(3.) IN the light of the above, we hold that the applicants have made out a strong prima facie case for waiver and accordingly dispense with the requirement of pre -deposit of duty and penalty and stay recovery thereof pending the appeal.