Full Judgment
2. The common Advocate for the applicant explains that duty has been demanded on the ground that the applicant clandestinely removed excisable goods without payment of duty. He contends that the applicant had contended before the Commissioner that even if duty was payable, Modvat credit would be available of the duty paid on the inputs used in the manufacture of final product; this has been refused by the Commissioner on the ground that the applicant did not file a declaration under Rule 57G or maintaining the prescribed records. He says that there are a large number of decisions of the Tribunal to say that credit should not be denied only on the account that declaration was hot filed citing in support in Gujarat Ambuja Cement v. C.C.E.-1996 (85) E.L.T. 154; Indian Oxygen Ltd. v. C.C.E. -1997 (89) E.L.T.557 and others. He points out that in some of these decisions, the Modvat credit has been permitted to be availed of without filing a declaration even though duty was confirmed under the extended period contained in the proviso to Section 11 A. If Modvat credit is allowed the duty liability would come down to Rs. 39 lakhs approx. Applicant has already deposited Rs. 30 lakhs.
3. Imposition of penalty under, Section 11 AC is challenged on the ground that the contravention alleged took place on 1994 till 1998 and duty on the period subsequent to enactment of the section on September 1996 may be Rs. 5 lakhs. Penalty on K. Sukhadia is challenged that there cannot be two penalties on partnership and partner. It is contended that the account assistant was only an employee and would not have intended to evade duty and. is not liable to penalty.
4. The departmental representative points to two decisions of the Asia Insulated Wires v. C.C.E. -1993 (44) ECR 131 to say that it has been held that filing of a 57G declaration is mandatory and credit cannot be knowingly and deliberately evaded payment of duty, which has been admitted by him and in such circumstances, Modvat credit should not be extended.
5. It appears that there are conflicting views expressed by the Tribunal as to whether Modvat credit would be available in the absence of Rule 57G declaration. The decision cited by either sides are shown as examples of the different views. However, the very fact of there being conflicting opinion at this stage, it has to be taken into account in determining the amount of deposit to be waived and the benefit would prima facie extend to the assessee. The departmental representative's contention about the knowing contravention of the assessee is answered by the decision of the Tribunal in which credit has been allowed to be taken even where duty was demanded by applying extended period. Taking these aspects into account, we order that on the applicant depositing Rs. 10 lakhs within 3 months from today, deposit of remaining amount of duty and penalty imposed on the assessee is waived and its recovery stayed.