2004 (5) TMI 391 - AT - Central Excise

Tribunal Upholds Duty Pre-deposit Order, Dismisses Modvat Credit Challenge

The Tribunal upheld the Commissioner's findings, requiring the appellant to pre-deposit a duty amount under Section 11D of the Central Excise Act. The ... Stay/Dispensation of pre-deposit Issues:1. Pre-deposit of duty amount under Section 11D of the Central Excise Act.2. Utilization of Modvat credit by the appellant.3. Excess duty collected by the appellant from customers.4. Validity of the order passed by the lower authority.Analysis:Issue 1: Pre-deposit of duty amount under Section 11D of the Central Excise ActThe appellant was required to pre-deposit a duty amount of Rs. 5,13,118/- as per Section 11D of the Central Excise Act for the purpose of hearing the appeal. The Commissioner's findings stated the specific amount demanded under this section, related to the utilization of Modvat credit by the appellant.Issue 2: Utilization of Modvat credit by the appellantThe appellant had a Modvat balance that lapsed when the Compounded Levy Scheme was introduced. The appellant challenged the levy under Section 3A, and the Kerala High Court granted a stay. During a specific period, the appellant discharged duty liability by utilizing the lapsed Modvat credit, collecting duty in excess of the prescribed amount. The excess duty collected was demanded by the Department under Section 11D of the Central Excise Act.Issue 3: Excess duty collected by the appellant from customersThe Department found that the appellant had collected duty far in excess of the prescribed amount from customers. Despite paying duty at a lower rate to the Department under the Compounded Levy Scheme, the appellant had collected duty at a higher rate from customers, leading to the demand for the excess amount under Section 11D.Issue 4: Validity of the order passed by the lower authorityAfter hearing submissions from both parties, the Tribunal upheld the findings of the Commissioner, stating that the order did not suffer from any infirmity. The Tribunal emphasized that the appellants could not adjust payments due under Section 11D from the lapsed Modvat balance. The Tribunal directed the appellants to pre-deposit the entire amount within a specified timeframe, warning that non-compliance would lead to the disposal of the appeal under Section 35F of the Act.In conclusion, the judgment addressed the pre-deposit requirement, the utilization of Modvat credit, the excess duty collected from customers, and the validity of the lower authority's order. The Tribunal affirmed the demand for the duty amount under Section 11D and instructed the appellants to comply with the pre-deposit directive to avoid further consequences under the Act.