Raj Unicols Lub. Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. this application seeking stay of the operation of the impugned order of the commissioner as also waiver of payment of an amount as deposits towards duty/penalty demanded in the order and further pending disposal of the appeal the recovery of the amount be stayed. in the impugned order an amount of rs. 2,82,25,481/- has been demanded from the applicant under rule 571 of the central excise rules and penalty of rs. 3 lakhs has ben imposed on them under rule 173q of central excise rules. shri raghvan iyer, ld. counsel for the applicants submitted that the applicants are doing the job work for the indian oil corporation for manufacture and supply of lubricants. indian oil corpn. supplied the base oil and additives for the purpose. the department's stand is that the applicants have received the inputs under cover of invoices which were not prescribed documents under rule 57g(2) of the central excise rules and also under cover of certain other challans which did not contain all the particulars for being acceptable as a duty paying documents. the learned counsel explained the method of supply of the inputs both base oil and additive from the indian oil corpn's depots to the applicant and submitted that the present situation has arisen only due to the fact that the ioc could not immediately make adjustments in their long established procedure for the supply of the inputs to job worker applicants in consonance with changed procedure under central excise law brought into effect from april, 1994. moreover, the learned counsel submitted that out of the total credit allowed of rs. 2,79,99,446/-, the applicants have been able to make available documents in the duplicate acknowledgment copies of the challan which would cover an amount of rs. 81,08,934/- in respect of base oil.learned counsel further submitted that because of voluminous documents the related documents covering the supply of additives have not yet become available. documents relating to additives available with them though not found to the satisfaction of the commissioner yet, the applicants are in a position to co-relate them to indicate their duty paying nature. learned counsel further pleaded that the applicants are only doing job work for the ioc and the pre-deposit of the huge demand and penalty will cause them undue hardship. shri satnam singh, learned dr opposes the stay and submits that in respect of the inputs received, admittedly in the documents at the hands of the applicants the required particulars for taking credit were absent and they have further taken credit on copies of invoices which were not the prescribed documents under rule 57g(2).2. we have carefully considered the submissions made by both the sides.the merits of the case are arguable and would involve appreciation of considerable volume of evidence in the background of the statutory requirement in the central excise law at the material time relating to modvat credit. this exercise is more appropriately undertaken when, the appeal comes up for decision on merits. we are not satisfied that this is a fit case for staying the operation of the impugned order. however, for the purpose of hearing the appeal on merits under section 35f of the central excises and salt act, we direct that the appeal be heard on merits on the condition of the applicant herein making a pre-deposit of rs. one crore and ninty-eight lakhs only on or before 30-11-1996 and on compliance with such direction the pre-deposit of balance amount of duty and whole of the penalty amount is dispensed with and its recovery stayed. the matter will come up for ascertaining the compliance with this order on 9-12-1996.

Judgment:
1. This application seeking stay of the operation of the impugned order of the Commissioner as also waiver of payment of an amount as deposits towards duty/penalty demanded in the order and further pending disposal of the appeal the recovery of the amount be stayed. In the impugned order an amount of Rs. 2,82,25,481/- has been demanded from the applicant under Rule 571 of the Central Excise Rules and penalty of Rs. 3 lakhs has ben imposed on them under Rule 173Q of Central Excise Rules. Shri Raghvan Iyer, ld. Counsel for the applicants submitted that the applicants are doing the job work for the Indian Oil Corporation for manufacture and supply of lubricants. Indian Oil Corpn. supplied the base oil and additives for the purpose. The department's stand is that the applicants have received the inputs under cover of invoices which were not prescribed documents under Rule 57G(2) of the Central Excise Rules and also under cover of certain other challans which did not contain all the particulars for being acceptable as a duty paying documents. The Learned Counsel explained the method of supply of the inputs both base oil and additive from the Indian Oil Corpn's depots to the applicant and submitted that the present situation has arisen only due to the fact that the IOC could not immediately make adjustments in their long established procedure for the supply of the inputs to job worker applicants in consonance with changed procedure under Central Excise law brought into effect from April, 1994. Moreover, the Learned Counsel submitted that out of the total credit allowed of Rs. 2,79,99,446/-, the applicants have been able to make available documents in the duplicate acknowledgment copies of the challan which would cover an amount of Rs. 81,08,934/- in respect of base oil.

Learned Counsel further submitted that because of voluminous documents the related documents covering the supply of additives have not yet become available. Documents relating to additives available with them though not found to the satisfaction of the Commissioner yet, the applicants are in a position to co-relate them to indicate their duty paying nature. Learned Counsel further pleaded that the applicants are only doing job work for the IOC and the pre-deposit of the huge demand and penalty will cause them undue hardship. Shri Satnam Singh, learned DR opposes the stay and submits that in respect of the inputs received, admittedly in the documents at the hands of the applicants the required particulars for taking credit were absent and they have further taken credit on copies of invoices which were not the prescribed documents under Rule 57G(2).

2. We have carefully considered the submissions made by both the sides.

The merits of the case are arguable and would involve appreciation of considerable volume of evidence in the background of the statutory requirement in the Central Excise Law at the material time relating to Modvat credit. This exercise is more appropriately undertaken when, the appeal comes up for decision on merits. We are not satisfied that this is a fit case for staying the operation of the impugned order. However, for the purpose of hearing the appeal on merits under Section 35F of the Central Excises and Salt Act, we direct that the appeal be heard on merits on the condition of the applicant herein making a pre-deposit of Rs. One crore and ninty-eight lakhs only on or before 30-11-1996 and on compliance with such direction the pre-deposit of balance amount of duty and whole of the penalty amount is dispensed with and its recovery stayed. The matter will come up for ascertaining the compliance with this order on 9-12-1996.