ORDER
S.S. Kang, Member (J)
1. This is an application for waiver of duty demand of Rs. 2,45,243/- and a penalty of Rs. 1 lakh.
2. The applicants are engaged in the manufacture of arc welding electrodes and working under the Modvat scheme. On 7-6-1991 the officers of Central Excise visited the factory of the appellant and inquired about the import of Nickel Powder which was used as inputs and the appellants were taking the benefit of credit on this Nickel Powder under the Modvat scheme. The adjudicating authority held that the appellants has wrongly taken the Modvat credit in respect of the 24 drums of Nickel Powder. The verification by the officers of the respondents in respect of 24 drums found in the production section reveals that these 24 drums of Nickel powder could not be correlated against the inputs on which the Modvat credit was taken. The chemical test of contents of these 24 drums confirmed that it contain waste of material which cannot be used for production. The adjudicating authority confirmed the demand in respect of Modvat credit taken by the applicants on these 24 drums of Nickel powder.
3. Shri M.D. Khatri, Vice President (Law) appearing on behalf of the appellant and submits that demand is based on presumption and assumption and is not based on cogent evidence. He further submitted that adjudicating authority admitted that two drums of Nickel Powder were found in the production section. These drums were also seized alongwith the 24 drums and later on after verification these drums were released to the applicants. He submits that this shows that Nickel Powder is being used for the manufacture of the final product welding electrodes. He further submitted that the welding electrodes cannot be manufactured without the use of Nickel powder. He therefore prays that the application be allowed.
4. Heard Shri A.M. Tilak, JDR. In this case the allegation against the applicant is that they have not used 24 drums of nickel powder in the manufacture of final product and they have taken the benefit of Modvat credit on inputs of these 24 drums. Shri Bathe, Production Manager of the firm in his statement stated that whatever the raw material was lying in the production floor was received from their store against the requisition slips but he was unable to correlate the material against any specific requisition slip. He also admitted that sometimes their store department supplies the material which were of not any use. He also admitted that similar useless material was received by them in the production section which was lying in these 24 drums and as per arrangement such raw material is kept in production section for sometime and subsequently sent to scrap yard. He also explained that this arrangement is being done for the purpose or availment of Modvat credit on the inputs. He made this statement on 14-7-1991. Thereafter in subsequent statement made on 17-8-1991 he also admitted that arrangements were made for the purpose of adjustment of Modvat credit. This shows that the applicants has issued 24 drums showing as Nickel powder to the production section whereas these drums contains waste material which cannot be used for production.
5. No financial hardship is pleaded. On the specific query from the Bench Shri M.D. Khatri., Vice President (Law) admitted that the applicants is a profit making concern. In these circumstances, it is not a fit case for waiver of duty demand in the adjudication order. It is directed to the appellant to deposit the total duty demand of Rs. 2,45,243/- within six weeks for the receipt of the order. On deposit of the amount of Rs. 2,45,243/-, the deposit of penalty of Rs. 1 lakh is waived and the recovery of the same is stayed during the pendency of the appeal. The case is fixed for reporting compliance on 6-4-1998.