ORDER
K. Sankararaman, Member (T)
1. Shri R. Nambirajan, learned Advocate for the petitioners M/s. Super Cassettes Industries Ltd. states that the demand had arisen on account of disallowance of MODVAT Credit taken by them on their inputs which were being utilised by them in the first instance for the manufacture of shells for Audio Cassettes which were then utilised in the manufacture of Audio Cassettes. Till 16-5-1990 they were clearing audio shells free of duty under Notification 217 of 1986 as they were being utilised captively for the further manufacture of the dutiable product, audio cassettes. After the said date, audio cassettes became exempt from duty and accordingly the benefit of Notification No. 217 of 1986 was not admissible to them. They had, therefore, filed the classification list of audio shells and paid duty thereon by debiting to their RG 23A Part II account. Shri Nambirajan contended strongly that this is not a case where there was no declaration at all filed. They had actually declared the shells in their declaration furnished under Rule 57G but the difference was that it was declared as inputs whereas they had utilised the credit for payment of duty on such shells which therefore became identifiable as final products. He referred to the stay order granted by this Bench in the case of M/s. S.R.F. Ltd. v. CCE, Jaipur, vide Stay Order No. S/198/94-NRB which in turn had relied upon SRB judgment in Indian Aluminium reported in 1992 (59) E.L.T. 168. There was also a somewhat similar issue which came up for decision and the applicants/appellants had been allowed the benefit of MODVAT credit for payment of duty on final products which had not actually been declared as such. The learned advocate, Shri Nambirajan also stated that they had paid a part of the demand and what remains to be decided now is a sum of Rs. 1,93,865.47. He pleaded that on the basis of the earlier decisions cited by him waiver of pre-deposit may be granted till the hearing of the appeal as also stay of recovery.
2. In reply to the arguments of the learned Advocate, Shri Sanjeev Sachdeva, learned Departmental Representative stated that the impugned order makes it clear that the credit was not admissible to them for being utilised for payment of duty on final products which had not been declared by them. He tried to distinguish the cases stated by the learned advocate.
3. We have considered the arguments made before us. The matter is an arguable one. One decision is in respect of the stay application (M/s. S.R.F. Ltd.) while the Indian Aluminium case is a final order. We find that the argument of the learned Departmental Representative that the credit is not admissible in the present case as the final products in question had [not]1 been declared seems to be in confirmity with the provisions of Sub-rule (4) of Rule 57F. We, therefore, feel that a prima facie case has not been made out by the petitioners. Accordingly we direct them to deposit 50% of the amount now due from them as a result of the impugned order after taking into account the amounts already paid by them in the adjudication proceedings. At this stage, the learned advocate made a submission that in case they have unutilised RG 23A Part II balance they may be permitted to make the pre-deposit out of such balance. We are agreeable to grant this request subject to said balance being of undisputed MODVAT credit. If they have such credit balance, we direct them to make the payment of the full amount due from such balance within two months from today. Compliance to be reported on 9-2-1995.