M/S. J.K. Steel and Alloys Vs. Commissioner of Central Excise and - Court Judgment

Excerpt:
this is an application for waiver of pre-deposit of duty of rs.28,79,290/- and penalty of rs.31,95,416/-. we have heard shri a.d.maru, advocate for the applicants and shri b.k. choubey for the revenue.2. the demand is made and confirmed on two grounds. denial of rs.18,21,210/- is on the ground of improper availment of deemed credit during the period 1.4.1992 to 30.9.1994. the ruling order of the ministry was numbered ts/36/94-tru dated 1.3.1994. this order superseded earlier order no.342/5/91-tru dated 7.7.1992. the earlier order very clearly stated that where the materials were obviously not duty paid, then the credit was not available. the order which was in existence at the material time did not have any such stipulation. it permitted deemed credit to be taken by all re-rollers operating under notification 1/93 on the ingots and re-rollable materials which were "deemed to have paid duty". in the absence of any condition even if the fact that such goods were obviously not duty paid, go ground could be made by the revenue to deny such credit. prima facie, therefore, we find merit on the plea made by the assessee in this part.3. the second part is of rs.10,62,222/-. this refers to the credit taken on such scrap lying in the premises of another company, namely saurashtra iron foundry & steel works pvt. ltd. this scrap was purchased as the company had gone bankrupt under the directions of the high court. the allegation here is that the value of this scrap was inflated by them to take extra credit. it was also held that the scrap was generated some time before 1986 and in terms of the provisions of rule 57h, the payment of duty on such goods prior to 31.11.1986 did not entitle recipient to take credit. we find prima facie case for the revenue in this particular area.4. we have also care fully examined the plea of financial hardship backed by a certificate given by chartered accountant. in this certificate the accumulated losses have been shown on the "liability" side of the balance sheet. this is not in terms of the accepted accounting terms. we have therefore great doubt about the truthfulness of the document. even otherwise, in spite of the losses,we find that the cash flow and liquidity of the applicant company are sound. we therefore direct them to deposit the sum of rs.10,62,222/- within eight weeks from the receipt of this order or within 12 weeks from today whichever is earlier. on this deposit being made, further pre-deposit of the remaining amount as well as penalties imposed shall stand waived and their recovery stayed. posted for compliance in the third week of june, 2001. issue notice.

Judgment:
This is an application for waiver of pre-deposit of duty of Rs.28,79,290/- and penalty of Rs.31,95,416/-. We have heard Shri A.D.Maru, advocate for the applicants and Shri B.K. Choubey for the Revenue.

2. The demand is made and confirmed on two grounds. Denial of Rs.18,21,210/- is on the ground of improper availment of deemed credit during the period 1.4.1992 to 30.9.1994. The ruling order of the Ministry was numbered TS/36/94-TRU dated 1.3.1994. This order superseded earlier order No.342/5/91-TRU dated 7.7.1992. The earlier order very clearly stated that where the materials were obviously not duty paid, then the credit was not available. The order which was in existence at the material time did not have any such stipulation. It permitted deemed credit to be taken by all re-rollers operating under notification 1/93 on the ingots and re-rollable materials which were "deemed to have paid duty". In the absence of any condition even if the fact that such goods were obviously not duty paid, go ground could be made by the Revenue to deny such credit. Prima facie, therefore, we find merit on the plea made by the assessee in this part.

3. The second part is of Rs.10,62,222/-. This refers to the credit taken on such scrap lying in the premises of another company, namely Saurashtra Iron Foundry & Steel Works Pvt. Ltd. This scrap was purchased as the company had gone bankrupt under the directions of the High Court. The allegation here is that the value of this scrap was inflated by them to take extra credit. It was also held that the scrap was generated some time before 1986 and in terms of the provisions of rule 57H, the payment of duty on such goods prior to 31.11.1986 did not entitle recipient to take credit. We find prima facie case for the Revenue in this particular area.

4. We have also care fully examined the plea of financial hardship backed by a certificate given by chartered accountant. In this certificate the accumulated losses have been shown on the "Liability" side of the balance sheet. This is not in terms of the accepted accounting terms. We have therefore great doubt about the truthfulness of the document. Even otherwise, in spite of the losses,we find that the cash flow and liquidity of the applicant company are sound. We therefore direct them to deposit the sum of Rs.10,62,222/- within eight weeks from the receipt of this order or within 12 weeks from today whichever is earlier. On this deposit being made, further pre-deposit of the remaining amount as well as penalties imposed shall stand waived and their recovery stayed. Posted for compliance in the third week of June, 2001. Issue notice.