Customs, Excise and Gold Tribunal - Mumbai
Associated Capsules Ltd. vs Commissioner Of Central Excise on 21 January, 2004
ORDER K.D.Mankar, Member (T)
1. The instant stay application has been filed by the appellants seeking waiver of pre-deposit of duty of Rs. 81,68,047/- and equivalent amount of penalty imposed on them vide the impugned order-in-original passed by the Commissioner of Central Excise.
2. The appellants manufacture PVC plain film and PVC film coated with polyvinyledine chloride (PVdC). The PVC, manufactured by the appellants is partially cleared for the market after payment of duty and partially within the factory for the manufacture of PVdC Film. The PVC film emerges in the roll form after the calendaring process which is subjected to quality testing by the Quality Assurance Department. On approval by the Quality Assurance Department, such rolls are taken to finishing section for final slitting and testing which includes blister packing trials and thermo-formability test. On final approval of such slitted reel, entries are made in RG-1 register and final packing is carried out.
3. In case of captive consumption of PVC film within the factory, rolls coming out of calendaring stage are taken to PVdC Coating Section, where PVdC is coated on PVC film. Again after coating, PVdC film emerges in roll form which is approved by Quality Assurance Department. Similarly, such PVdC film rolls are taken to finishing section for slitting and final testing as mentioned above, prior to recording in RG-1 register.
4. During the process of manufacture, failure to meet the Quality Standard either at roll stage or slitting stage, results in the material being scrapped because of its inability to meet the standards of finished goods. The material so scrapped is either re-used after being crushed within the manufacturing process or such material is transferred to scrap yard, from where it is cleared after payment of duty. The PVC material can be reused after being crushed within the manufacturing process, whereas PVdC material cannot be re-used after crushing.
5. There were seven allegations leveled against the appellants and against each certain amount of duty payable was quantified. These allegations are (i) clearance of fresh replacement against D-3 receipt without accountal and without payment of duty of Rs. 3,40,625/-. (ii) & (iii) - demand of Rs. 44,36,458.10/- and Rs. 15,96,959.20 in respect of unaccounted old and redundant PVC films and PVdC coated PVC films in Jumbo rolls/slit slit reels which have been disposed off and written off by scrapping without obtaining Central Excise remission, (iv) - Demand of Rs. 1,43,634.34 in respect of clearance of finished goods to blister packing trials without accounting for in the statutory records and without discharging the central excise duty leviable thereon, (v) & (vi) - Demand of duty for Rs. 6,12,500/- on 35 Mts. Of PVC films which was found to have been adjusted in Balance Sheet and demand of duty of Rs, 12,11,950.50 in respect of the raw materials on which Modvat credit availed found short.
6. The learned Commissioner examined the defence and confirmed the aforesaid demand and also imposed appropriate penalties.
7. Through the instant stay application it is claimed that the demand is not sustainable on merits.
8. Heard both sides. On careful examination of order, we note that the appellants have not made a prima-facie case on merits to waive the pre-deposit of the entire amount of duty and penalty. It has come on record that fully manufactured PVC films/ PVdC films in fully marketability conditions were not accounted for in the statutory records and disposed off by scrapping. In the absence of orders from the competent authorities granting remission of duty in respect of fully manufactured goods, prima-facie we note that the appellants were required to pay duty. It is however claimed by the appellants that the said goods had not reached the stage of marketability. We note that as to whether or not, the impugned demands are sustainable will require detailed examination during the regular hearing of the appeal. However, prima-facie we feel that there is no case for waiver of pre-deposit of the entire duty amount as requested by the appellants.
9. Accordingly, we direct the appellants to pre-deposit an amount of Rs. 35 Lakhs towards duties within 8 weeks. On such deposits the pre-deposit of balance amount of duty and penalty shall be waived and their recoveries stayed till the final disposal of this appeal.
10. Posted for compliance on 29.3.2004.
(Pronounced in Court)