Stay Order No. S-559/CAL/99 arising from Stay Petition No. SP-21/99 in Appeal No. E-11/99. Case: Cureworth (India) Ltd. Vs Commissioner of Central Excise, Indore-II. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)

Case NumberStay Order No. S-559/CAL/99 arising from Stay Petition No. SP-21/99 in Appeal No. E-11/99
CounselFor Appellants: Shri S.K. Bagaria, Advocate and For Respondents: Shri T.P. Kumar, SDR.
JudgesSmt. Archana Wadhwa, Member (J) and Shri C.N.B. Nair, Member (T)
IssueCentral Excise Act, 1944 - Section 35F
Judgement DateJuly 22, 1999
CourtCEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)


Archana Wadhwa, Member (J), (Eastern Bench At Calcutta)

  1. The applicants are making a prayer for dispensing with the condition of pre-deposit of penalty amount of Rs. 21,43,309/- imposed under the provisions of Rules 173Q and 226 of Central Excise Rules, 1944 and an equal amount of penalty imposed under Section 11AC.

  2. Shri S.K. Bagaria, ld. Advocate appearing for the appellants submits that the applicants are engaged in the manufacture of bulk drugs. With the introduction of Rule 57F (17) (b) w.e.f. 1-3-1997, which required the appellants to reverse the Modvat credit earned and lying unutilised in their records as on 1-3-1997. However, the proviso to the said rule was to the effect that if the inputs are lying in stock or contained in finished products lying in stock as on 1-3-1997, the provision of the said rule would not apply. He submits that the applicants'' jurisdictional Central Excise authorities entertained a view that if the inputs are lying in their factory as contained in semi-finished stage, the Modvat credit earned on the inputs is required to be debited by them inasmuch as the said proviso does not apply to the inputs lying in semi-finished stage. Accordingly, submits the ld. Advocate that the applicants made a reversed entry of Modvat credit on 4-3-1997 equivalent to an amount of Rs. 10 lakhs and a little odd, by filing a declaration on 3-3-1997. Thereafter another declaration was filed by them on 7-3-1997 to the effect that certain other goods lying as semi-finished stage had escaped their attention and as such could not be entered in the first declaration filed on 3-3-1997. Accordingly after filing the said declaration on 7-3-1997 another reversed entry was made in the Modvat credit equivalent to the tune of Rs. 14 lakhs and a little odd. Thereafter the Superintendent made a visit to their factory for verification of the declarations made by them. As a result of verification the officer found certain goods which had attained the final stage were not entered in the appellants'' RG 1 register. Accordingly the same were seized and the statements of the appellants'' representatives were recorded. Shri Bagaria at this stage drew the attention of the Bench to their letter dated 3-4-1997 addressed to the Superintendent which is to the effect that 29 drums, though had completed all the seven stages of chemical processes were yet to undergo the process of blending, milling, safting as well as final chemical analysis...

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