Pre-deposit waiver for capital goods written off in books was granted because the goods remained in the factory.

Waiver of pre-deposit was sought on the ground that capital goods had been written off in the books, but remained physically in the factory. The dispute turned on Rule 57S of the Central Excise Rules, under which reversal of credit was contended to arise only on removal of the capital goods from the factory. As removal had not occurred, the factual basis for demanding immediate pre-deposit was not established. On that footing, waiver of pre-deposit of the duty and penalty was granted and the stay petition was allowed.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of duty and penalty in view of the contention that the capital goods had been written off in the books but were still lying in the factory.

Analysis: The undisputed position was that the capital goods in respect of which credit had been disallowed were still lying in the factory. The demand was resisted on the basis that reversal of credit under Rule 57S of the Central Excise Rules was attracted only upon removal of the capital goods from the factory. Since removal had not taken place, the factual basis for insisting on immediate pre-deposit was not established.

Conclusion: Waiver of pre-deposit of the entire duty and penalty was granted, and the stay petition was allowed.

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