2006 (3) TMI 178

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....ation dated 30-1-2004. 3. The background, in which the petition has come to be filed, is as under : The petitioner is engaged in the manufacture of galvanized flattened strips and wires. It was paying Central Excise on the product manufactured by it and in the process, availing Cenvat credit of the duty paid on the inputs used therein, on the strength of a circular issued by the Central Board of Excise and Customs (for short, 'the Board') dated 16-2-2001. The said circular clarified that drawing of wire from wire rod amounted to "manufacture" and therefore, exigible to excise duty. These instructions were, however, withdrawn by another circular dated 29-5-2003. On 8-4-2003, a notice was issued to the petitioner, alleging that the p....

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....nly on the ground that even if the allegation against the petitioner that it had availed of the Cenvat credit wrongly is taken to be correct, the fact remains that the petitioner had paid central excise duty of over Rs. 2.5 crores on the final product by taking the process of drawing of strips and wires from wire rods as amounting to "manufacture". It is argued that if the stand of the Department to the effect that the said process did not amount to "manufacture" was correct, the necessary corollary was that the Revenue had collected an amount of Rs. 2.5 crores as Central Excise duty without the authority of law, which has to be refunded. Relying on the decision of the Supreme Court in Collector of Central Excise v. Maruti Foam (P) Ltd., 20....

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....scretion so vested in the authority is coupled with a duty and has to be exercised in accordance with the rules of reasons and not arbitrarily or fancifully. It is trite that while dealing with an application for waiver of condition of pre-deposit, it is neither desirable nor proper to embark upon a detailed enquiry to find out whether the stand of the applicant is on terra firma because expression of a final opinion on the merits at that juncture, without full-fledged hearing and consideration of the entire material, is likely to cause prejudice to either side. But at the same time, the authority concerned is required to consider whether, with reference to the material placed before it, a prima facie case for waiver of deposit is made out ....