Per Shri V.P. Gulati :

By this application the applicants has sought for dispensation of pre-deposit of an amount of Rs. 1,62,17,396/- which has been held to have been taken as MODVAT credit wrongly under Rule 57Q of the Central Excise Rules as also a penalty of Rs. 50 Lakhs levied in terms of the impugned order.

2. The learned Advocate for the appellants has pleaded that duty from the appellants has been demanded under two heads. The amount demanded is in respect of items falling under there two heads as listed in Annexure 1 and 11 to the show cause notice issued to the appellants in the proceedings. Under Annexure-1, he has pleaded the items listed are those which the learned lower authority has held could not be eligible items for MODVAT purposes as the same were not in the nature of capital goods. While in respect of items listed in Annexure-11, it has been held by the learned lower authority that the MODVAT credit could not have been taken as the items listed thereunder came to be included as capital goods only by issue of Notification 11/95 dated 16.3.95 and by virtue of the condition in the Notification the goods which were received prior to 16.3.95 and which came to be included as capital goods on that date, could not be taken into reckoning for the purpose of MODVAT credit in terms of the Notification 11/95. He has pleaded that the learned lower authority has not discussed item-wise the reason for denial of the benefit of the MODVAT credit in respect of each of those items listed in Annexure-11. He has pleaded that two factors will have to be taken into consideration for the purpose. One whether these goods were received in the factory prior to 16.3.95 and two whether these goods could be considered as capital goods as such in terms of Rule 57Q, prior to the issue on Notification 11/95.

3. He has pleaded a large number of items are listed under Annexure-11 and only one of the items viz., refractory bricks have been specifically mentioned. He has pleaded that an examination in this regard was required to be done, more so in the light of the decision of the North Regional Bench in the case of M/s. J.K. Synthetics Vs. CCE, Jaipur reported in 1996 (17) RLT 98 =1996 (88) ELT 785. He has pleaded, the Tribunal's above decision is applicable. It was pointed out to the learned Advocate that this decision was rendered in the context of Notification 14/96, wherein capital goods were defined in terms of the Tariff Headings and it was in that context it was held that this Notification was clarificatory in nature. He has pleaded that the condition of the Notification applicable in the context of Notification 14/96 was similar to that of Notification 11/95. He has pleaded, therefore, so far as the capital goods covered by Annexure-11 are concerned, the learned lower authority's order was not proper. In any case, he has pleaded, there should have been an item-wise discussion as to whether even otherwise prior to the issue of Notification 11/95, the appellants goods could be taken to be capital goods in terms of the definition of the capital goods as set out under Rule 57Q obtaining prior to 16.3.95. In this connection we have asked him to refer to the show cause notice. In para 3 of the show cause notice the reason for denying the MODVAT credit in respect of items listed in Annexure-11 has been set out and it has been clearly mentioned that since the goods had been, as per the appellant's private records, received in the factory prior to 16.3.95, the MODVAT credit would not be available. He was asked to refer to also the reply in this regard and after going through that, he fairly concedes that the reply was only in general terms stating that the appellants, notwithstanding the cut-off date of 16.3.95 would be still eligible to MODVAT credit in respect of the goods which were received prior to the said date.

4. In regard to Annexure-1, he has pleaded that again there is no item-wise discussion, but he concedes that the items had bee