Member (T) waives pre-deposit, stays recovery of duty/penalty. Case set for regular hearing.Shri K.D. Mankar, Member (T) [Order]. - The appellants have moved the instant stay application seeking waiver of pre-deposit of Rs. 34,427/- for the amount of Cenvat credit disallowed along with request for dispensation of pre-deposit of penalty of an equivalent amount. The appellants are undertaking the job work on behalf of some principal manufacturers who send the wire rods (Raw Materials) to the appellants for further processing viz., softening and cold drawing. The said materials a... ... ... Issues:
Appellants seeking waiver of pre-deposit for Cenvat credit disallowed and penalty, interpretation of duty payment on job work processed materials.

Analysis:
The appellants in this case sought a waiver of pre-deposit amounting to Rs. 34,427 for Cenvat credit disallowed and requested dispensation of penalty of an equivalent sum. They were engaged in job work for principal manufacturers, processing wire rods by softening and cold drawing, and returning the processed materials to the principals without duty payment. The appellants utilized duty paid materials like LDO, Wire Drawing Powder, Grinding wheels, and Phosphate Chemicals as consumables, claiming Modvat credit. The department contended that since the dispatches through job work were duty-free, the appellants should reverse the credit of duty paid on the inputs in the material sent out under the job work procedure.

The appellants relied on judgments of CEGAT in cases involving Bajaj Tempo Ltd. and Jindal Polymers, arguing that goods cleared under job work procedures do not become nil rate or exempted goods, as they are required to be cleared from the principal manufacturer's premises with appropriate duty payment. The Member (T) noted the strong prima facie case made by the appellants in their favor to waive the pre-deposit of the entire amount.

Consequently, the Member (T) decided to waive the pre-deposit of the total duty and penalty amount, staying their recovery until the case's final disposal. The case was scheduled for regular hearing on 3-5-2004. Stay/Dispensation of pre-deposit - Modvat/Cenvat JINALLOY STEEL PROCESSORS Versus COMMISSIONER OF CENTRAL EXCISE, BELAPUR
Central Excise
2004 (3) TMI 258 - CESTAT, MUMBAI - 2004 (175) E.L.T. 486 (Tri. - Mumbai)
CESTAT, MUMBAI - AT
Dated:- 1-3-2004
E/3700/2003 - 1082/2004-WZB/C-IV
Central Excise
Shri K.D. Mankar, Member (T) [Order]. - The appellants have moved the instant stay application seeking waiver of pre-deposit of Rs. 34,427/- for the amount of Cenvat credit disallowed along with request for dispensation of pre-deposit of penalty of an equivalent amount. The appellants are undertaking the job work on behalf of some principal manufacturers who send the wire rods (Raw Materials) to the appellants for further processing viz., softening and cold drawing. The said materials after undergoing the aforesaid process, is returned to the original i.e. principal manufactures, without payment of duty. The appellants used the duty paid material like LDO, Wire Drawing Powder, Grinding wheels and Phosphate Chemicals as consumables on which they have taken the Modvat credit. The department's case is that, since the despatches through the process of job work are without payment of duty, the appellants are required to reverse the credit of duty paid on the inputs contained in the material sent out of the factory under the job work procedure. 2. The appellants have placed reliance on the judgment of the CEGAT in the case of Bajaj Tempo Ltd. v. Collector reported in 1994 (69) E.L.T. 122 (Tri.) and also the judgment of the CEGAT in the case of Jindal Polymers v. CCE, Meerut-III reported in 2001 (135) E.L.T. 657 (Tri.-Del). In terms of the said judgments, the goods cleared under the job work procedure do not become the goods chargeable to nil rate of duty or exempted goods, as the said goods subsequently are required to be cleared from the principal manufacturer's premises on payment of appropriate duty. 3. In view of the submission, I find that the appellants had made a strong prima facie case in their favour to waive the pre-deposit of the entire amount. 4. Accordingly, I waive the pre-deposit of the entire amount of duty and penalty and stay their recovery till the disposal of the case. 5. Post for regular hearing on 3-5-2004.
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