M.C.Agarwal, J. - (1.) By this petition under Article 226 of the Constitution of India, the petitioner challenges an order dated 14-1-1999 passed by the Commissioner (Appeals), Customs and Central Excise, Ghaziabad whereby in exercise of the powers under the proviso to Section 35F of the Central Excise Act, 1944 he has partially waived the condition of pre-deposit and has directed the petitioner to deposit Rs. 22.88 lacs and the recovery of the balance has been waived till the hearing of the appeal.
(2.) I have heard Sri Bharat Ji Agarwal, learned Advocate for the petitioner and Sri Surya Prakash, learned Standing Counsel for the respondents.
(3.) The petitioner claimed Modvat credit by virtue of Rule 57B of the Central Excise Rules for high speed diesel oil used by it for the production of electricity for its factory that manufactures synthetic filament yarn. Clause (iv) of the Rule 57B specifically mentions goods used for generation of electricity or steam used for manufacture of final products or for any other purpose within the factory of production. In pursuance of this Rule enacted w.e.f. 1-12-1997 the petitioner availed Modvat credit for the period December, 1997 to March, 1998. By an amendment that was made affective from 2-3-1998 an Explanation was added to Rule 57B clarifying that the term inputs refer only to such inputs as may be specified in a notification issued under Rule 57A. The Asstt. Commissioner, Central Excise issued a notice to the petitioner to show cause why the Modvat credit availed by the petitioner during the December, 1997 to March, 1998 be not withdrawn and ultimately after hearing the appeallant be disallowed Modvat credit amounting to Rs. 32,10,378/- and also imposed a penalty of Rs. 18,43,827/-. It is this order that is under appeal before the Commissioner and in relation to which the impugned order has been passed. The learned Commissioner on the application of the appellant partially waived the condition of pre-deposit of adjudicated dues and directed that only Rs. 22.88 lacs be deposited. He has observed that so far as the penalty is concerned, there is a lot of force in the argument put up by the appellant that penalty is not imposable when the matter revolved around the question of interpretation of Rule.;