Tribunal Grants Stay on Excise Duty Recovery Pending Appeal for Flex Industries Ltd.S/Shri V.K. Agrawal, P.S. Bajaj, JJ. REPRESENTED BY : Shri Arvind Arora, Joint Executive Manager (Excise), for the Appellant. Shri P.M. Rao, JDR, for the Respondent. [Order per : V.K. Agrawal, Member (T)]. - This is an application, filed by M/s. Flex Industries Ltd., for waiver of pre-deposit of Central Excise duty Rs. 13,19,217.00. 2. Shri Arvind Arora, Joint Executive Manager of the appellants, submitted that they had availed of Modvat... ... ... Issues:
Application for waiver of pre-deposit of Central Excise duty based on denial of Modvat credit due to amendment in Rule 57Q of Central Excise Rules.

Analysis:
The case involves an application by M/s. Flex Industries Ltd. for waiver of pre-deposit of Central Excise duty amounting to Rs. 13,19,217.00 due to the denial of Modvat credit. The appellant had availed Modvat credit on duty paid for capital goods between January 1996 to June 1996. The Commissioner (Appeals) denied the credit citing an amendment to Rule 57Q of the Central Excise Rules through Notification No. 14/96 dated 23-7-96. The denial was based on the amended rule not covering the classification of goods in question. The appellant argued that the amended rule should not apply to capital goods received before the amendment date as those goods were covered under the previous definition of capital goods. The appellant contended that the amended rule should not retroactively affect their eligibility for Modvat credit.

The Joint Executive Manager for the appellant presented the case, emphasizing that the goods in question fell under the definition of capital goods as per the previous Rule 57Q. On the other hand, the learned DR opposed the appellant's prayer for waiver of pre-deposit, reiterating the grounds stated in the impugned order. After considering the submissions from both sides, the Tribunal found merit in the appellant's argument. The Tribunal observed that prima facie, the appellant's contention that the amendment should not apply to goods received before the effective date of the amendment appeared to be correct. Consequently, the Tribunal granted a stay on the recovery of the entire duty amount during the appeal's pendency. The case was scheduled for regular hearing on 19-12-2003, indicating that a detailed examination of the matter would take place at the next hearing.

This judgment highlights the importance of the timing of regulatory amendments concerning tax credits and the interpretation of rules governing such credits. It underscores the principle that changes in rules should not adversely affect parties who have already complied with the regulations in force at the time of their transactions. The decision to stay the duty recovery pending appeal demonstrates the Tribunal's recognition of the appellant's prima facie case and the need for further examination of the issues raised regarding the applicability of the amended rule to the appellant's situation. Stay/Dispensation of pre-deposit - Cenvat/Modvat FLEX INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., NOIDA
Central Excise
2003 (11) TMI 527 - CESTAT, NEW DELHI - 2004 (177) E.L.T. 1148 (Tri. - Del.)
CESTAT, NEW DELHI - AT
Dated:- 6-11-2003
E/2457/2003-NB(C) - S/383/2003-NB(C)
Central Excise
S/Shri V.K. Agrawal, P.S. Bajaj, JJ. REPRESENTED BY : Shri Arvind Arora, Joint Executive Manager (Excise), for the Appellant. Shri P.M. Rao, JDR, for the Respondent. [Order per : V.K. Agrawal, Member (T)]. - This is an application, filed by M/s. Flex Industries Ltd., for waiver of pre-deposit of Central Excise duty Rs. 13,19,217.00. 2. Shri Arvind Arora, Joint Executive Manager of the appellants, submitted that they had availed of Modvat credit of the duty paid on capital goods during the period from Jan., 1996 to June, 1996; that the Modvat credit has been denied to them by the Commissioner (Appeals) under the impugned order on the ground that by the time the Modvat credit was taken, Rule 57Q of the Central Excise Rules had been amended by Notification No. 14/96 dated 23-7-96 and the scope of capital goods had been explained by specifying the classification of the goods and the goods, in question, were not covered by the amended Rule 57Q. He contended that the Rule as amended by Notification No. 14/96 dated 23-7-1996, cannot be made applicable to the capital goods received by them up to June, 1996, during which period, all the goods in question, were covered by the definition of capital goods as given in Explanation 1 of Rule 57Q of Central Excise Rules. 3. Opposing the prayer, Sh. P.M. Rao, learned DR, reiterated the grounds contained in the impugned order. 4. We have considered the submissions of both the sides. Prima facie, the stand taken by the applicants that the Notification dated 23-7-1996 cannot be made applicable to the capital goods received prior to that date, appears to be correct. The applicants have, thus, made a strong prima facie case in their favour. We, therefore, stay the recovery of entire amount of duty during the pendency of the appeal, which is posted for regular hearing on 19-12-2003.
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