Schenectady Specialities Asia Vs. Commr. of Cus. and C. Ex. - Court Judgment

Excerpt:
1. these applications for waiver of pre-deposit of duty and stay recovery thereof arose out of the order of commissioner of central excise (appeals). in the impugned order, the commissioner (appeals) confirmed the orders of the lower authority who demanded rs. 55,26,2427- being the modvat credit taken on the capital goods which were subsequently destroyed in a fire accident. similarly, the lower authority demanded a sum of rs. 14,74,796/- being the credit taken on the inputs which were also destroyed in a similar manner.3. the question for consideration at the preliminary stage is whether an assessee is required to reverse the credit taken on the capital goods and raw materials when such goods are destroyed in fire. in regard to loss of inputs in fire, it appears that the issue is prima facie covered by the decision of the tribunal in favour of the applicant in the case of asian paints (i) ltd. v. cce, mumbai-ii [2004 (173) e.l.t. 187 (tri.-mumbai)]. in regard to reversal of modvat credit taken on the capital goods which were destroyed in fire, we observe that the rule position as it existed at the material time did not envisage reversal of credit taken in such an eventuality. prima facie it appears that the demand for reversal of credit on inputs and capital goods is not covered by modvat. in view of this, we are of the opinion that the applicants made out a strong prima facie case in their favour warranting waiver of pre-deposit of duty and stay recovery thereof during the currency of these appeals. we order accordingly. now that stay of operation of the impugned order is given, the department is restrained from taking any action to recover the impugned demands.4. the stay applications and the miscellaneous application seeking directions to the department to refrain from any coercive action to recover the amounts are disposed off accordingly.

Judgment:
1. These applications for waiver of pre-deposit of duty and stay recovery thereof arose out of the order of Commissioner of Central Excise (Appeals). In the impugned order, the Commissioner (Appeals) confirmed the orders of the lower authority who demanded Rs. 55,26,2427- being the Modvat credit taken on the capital goods which were subsequently destroyed in a fire accident. Similarly, the lower authority demanded a sum of Rs. 14,74,796/- being the credit taken on the inputs which were also destroyed in a similar manner.

3. The question for consideration at the preliminary stage is whether an assessee is required to reverse the credit taken on the capital goods and raw materials when such goods are destroyed in fire. In regard to loss of inputs in fire, it appears that the issue is prima facie covered by the decision of the Tribunal in favour of the applicant in the case of Asian Paints (I) Ltd. v. CCE, Mumbai-II [2004 (173) E.L.T. 187 (Tri.-Mumbai)]. In regard to reversal of Modvat credit taken on the capital goods which were destroyed in fire, we observe that the Rule position as it existed at the material time did not envisage reversal of credit taken in such an eventuality. Prima facie it appears that the demand for reversal of credit on inputs and capital goods is not covered by modvat. In view of this, we are of the opinion that the applicants made out a strong prima facie case in their favour warranting waiver of pre-deposit of duty and stay recovery thereof during the currency of these appeals. We order accordingly. Now that stay of operation of the impugned order is given, the department is restrained from taking any action to recover the impugned demands.

4. The stay applications and the miscellaneous application seeking directions to the department to refrain from any coercive action to recover the amounts are disposed off accordingly.