S.N. Busi, Member (T)

1. In this Stay Petition, M/s. Mehra Traders, Dum Dum, seek waiver of the condition of pre-deposit of entire penalty of Rs.27,945/- imposed on them vide Order-in-Original No. 33(52) Cal.9/97/AC, dated 1-10-1997 of Assistant Commissioner, G Division, Calcutta.

2. Shri D.K. Sarkar, ld. Consultant, submits that in the show cause notice it was alleged that during the period from October to December, 1994, the applicants availed Modvat credit (basic as well as additional duty) on the strength of incorrect documents/invoices evidencing payment of Central Excise duty. The applicants reply in regard to basic duty was accepted by the adjudicating authority and accordingly allowed Modvat credit to the extent of Rs. 5,34,316.86 and as regards the balance Modvat credit of Rs. 69,863.29 he disallowed the same on the ground that Additional duty on Textile & Textile Articles cannot be taken as Modvat credit. Assistant Commissioner has also imposed a penalty of Rs. 27,945/- on the appellants under Rule 173Q of the Central Excise Rules, 1944.

2.1 The ld. Consultant further submits that accepting the contention of the Department as regards inadmissibility of the said additional duty, the applicants reversed the same much before the adjudication order was issued. He clarified that the applicants were unaware of the correct legal position when they availed Modvat credit in respect of the said additional duty. He pleads that imposition of penalty was not warranted as the applicants had no intention to take Modvat credit fraudulently. He, therefore, argues that there is a strong prima facie case in favour of the applicants and prays for dispensing with pre-deposit of the penalty imposed on them.

3. Shri R.K. Roy, ld. JDR appearing for Revenue, opposes the said prayer of applicants.

4. I have heard both sides and perused the Order-in-original and also the order impugned. The question to be decided is whether the applicants had any intention to misuse the facility of modvat credit. The applicants stoutly denies the same. On a careful consideration to their pleas, I find they have made out a prima facie case in their favour for waiver of the condition of pre-deposit of the entire amount. Accordingly, I grant their prayer. I order that the said amount shall not be recovered from them during pendency of the appeal. The Stay Petition is thus allowed unconditionally.