Wamal Indl. Chemicals Ltd. and Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....this is an application for stay of duty demand of rs. 3,91,800 and rs. 50,000 imposed as penalty. the facts of the case are that the assessee is manufacturing phosphorous penta sulphide by itself as well as through job worker for m/s. exeel industries ltd. they were claiming exemption under notification 214/86. the contention of the assessee was that in view of the specific words used in rule 57cc clauses (1) & (9) in respect of fuels, they need not maintain separate account. it is submitted by shri h. shroff, learned counsel, that before the issue of show cause notice modvat credit has been reversed. shri a.k.jain, learned jdr, states that this is the normal practice that some of the assessees adopt. in that they take the modvat credit and when the situation comes tight the credit thereby avoiding imposition of penalties.2. it is a fact the modvat credit even though taken by the assessee has been reversed. whether the penalty would be imposable or not has to be decided at the time of final hearing of the appeal. the maintenance of the separate accounts as contemplated under rule 57cc of the rules indicating in a prima facie way that under clauses (1) & (9) an exception.....

Judgment:

1. This is an application for stay of duty demand of Rs. 3,91,800 and Rs. 50,000 imposed as penalty. The facts of the case are that the assessee is manufacturing phosphorous penta sulphide by itself as well as through job worker for M/s. Exeel Industries Ltd. They were claiming exemption under notification 214/86. The contention of the assessee was that in view of the specific words used in Rule 57CC Clauses (1) & (9) in respect of fuels, they need not maintain separate account. It is submitted by Shri H. Shroff, learned Counsel, that before the issue of show cause notice Modvat credit has been reversed. Shri A.K.Jain, learned JDR, states that this is the normal practice that some of the assessees adopt. In that they take the modvat credit and when the situation comes tight the credit thereby avoiding imposition of penalties.

2. It is a fact the modvat credit even though taken by the assessee has been reversed. Whether the penalty would be imposable or not has to be decided at the time of final hearing of the appeal. The maintenance of the separate accounts as contemplated under Rule 57CC of the Rules indicating in a prima facie way that under Clauses (1) & (9) an exception has been carved out in respect of fuels that is exactly happened. I am therefore of the prima facie view that the applicant has made a strong case. Hence payment of penalty is waived in respect of both applicants.