ORDER
Jyoti Balasundaram, Member (J)
1. This is an application for waiver of pre-deposit and stay of recovery of a duty amount of Rs. 18,82,080.00 and penalty of Rs. 2 lakh confirmed and imposed by the adjudicating authority on LLDPE powder converted from granules and used by the applicants herein, in the manufacture of items such as swings, slides, rockers, play tools, children chairs, etc. The period in dispute is from October, 1996 to March, 1997. The demand has been confirmed holding that the process of conversion of granules to powder is a process of manufacture, by virtue of Note 6(b) of Chapter 39 of the Central Excise Tariff Act, 1985.
2. Ld. Counsel, Shri L.P. Asthana submits that at this stage, what he would seek to highlight, is not the issue on merits but the fact that the impugned order suffers from violation of principles of natural justice, as the documents sought for by the applicants in order to support their defence, were not furnished and further, though the date of hearing before the Commissioner had been fixed on 22-10-1997, the Commissioner heard the Chairman of the applicant-company, who appeared before him for a courtesy visit on 21-10-1997, and passed the order without reference to their letters of May and August, 1997 seeking copies of documents. He, further, submitted that the assessable value has been wrongly arrived at the cost of raw materials and cost of couversion of granules to powder] has been calculated correctly, while margin of profit has been calculated wrongly.
3. Ld. SDR, Shri Madan strongly opposes the prayer for waiver and points out that the impugned order refers to a reply having been filed by the applicants on 20-10-1997 and, therefore, there was no violation of principles of natural justice in the Commissioner hearing the Chairman of the applicant-company when he appeared before him on 21-10-1997 and then proceeding to pass the order. He submitted that the point regarding margin of profit has arisen only at the appeal stage and, therefore, should not be gone into at this prima facie stage. Regarding the claim that the applicants would be entitled to Rs. 12.5 lakh as Modvat credit, the ld. DR submits that there is no basis for the applicants to arrive at this figure and, therefore, he prays that the applicants may be directed to pay duty and penalty.
4. We have carefully considered the submissions of both sides. We are not satisfied prima facie that there has been a violation of principles of natural justice, having regard to reply to the show cause notice and further regard to the fact that the Chairman of the applicant-company appeared before the Commissioner on 21-10-1997 and was heard by him on that date. The calculation of margin of profit is an issue to be taken up at the time when the appeal is taken for hearing. Having regard to the totality of facts and circumstances of the case and noting the plea of the applicants that Modvat credit of Rs. 12.5 lakh would be available to them, we direct that the applicants deposit a sum of Rs. 6 lakh towards duty within a period of 12 weeks from the date of receipt of this order. On such deposit being made, the requirement of pre-deposit of balance duty and penalty shall stand waived and recovery stayed pending the appeal. Failure to comply with this direction shall result in vacation of stay and dismissal of the appeal without prior notice.