Skm Fabrics Vs. Commissioner of Central Excise

.....of the duty paid semi-processed fabrics the applicant availed modvat credit of the full duty paid by m/s. mrti processors, carried out further process and then cleared the finished products on payment of duty @ 20%. the department was of the view that the applicant had taken excess credit equal to the deemed credit availed of by the job worker whereas they should have taken credit only on actual duty paid by the job worker and hence the show cause notice was issued proposing recovery of the amount mentioned above and also proposing penal action. the notice was adjudicated by the deputy commissioner, who confirmed the duty demand and imposed penalty of rs. 1,00,000/-. the commissioner (appeals) upheld that order of the adjudicating authority and hence this appeal and stay application.2. on hearing both sides and noting that prima facie the applicants have taken exact amount of duties mentioned as paid in the invoices issued by the job workers as credit and also noting that prima facie there is no restriction in the relevant notification that the credit can be taken only of the actual duty (and not the deemed credit) i am of the view that a strong prima facie case for waiver of pre-deposit of duty and penalty has been made out by the applicants. the interpretation of the board's circular dated 3rd september, 1996 relied upon by the authorities below will be considered at the time of final hearing of the appeal. the pre-deposit the duty and penalty is waived and recovery thereof stayed pending the appeal.