2002 (2) TMI 1005 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 5/94-C.E. (N.T.) and Notification 21/99-C.E. (N.T.) regarding debiting AED (TTA) from BED account.
2. Utilization of Modvat credit on inputs for payment of Additional Duty of Excise.
3. Applicability of Rule 57A(2) in allowing the credit of Basic Excise Duty for discharging Additional Excise Duty.
4. Clarification on the utilization of Basic Excise Duty credit for paying Additional Excise Duty.
5. Difference in utilizing credit of Basic Excise Duty on capital goods for paying Additional Excise Duty.
6. Legal position on utilizing Basic Excise Duty credit for paying Basic Excise Duty on the finished product.

Analysis:
1. The judgment dealt with two appeals arising from the same order regarding the debiting of AED (TTA) from the BED account. The Commissioner (Appeals) held that debiting AED (TTA) from BED account in RG 23A Pt. II register was incorrect based on relevant notifications.

2. The case involved the utilization of Modvat credit on inputs for paying Additional Duty of Excise, leading to a demand and penalty imposition on the appellant. The appeals were filed by both the appellant and the Revenue, challenging the Commissioner's findings on the restriction of utilizing Basic Excise Duty credit for Additional Excise Duty.

3. The appellant argued that Rule 57A(2) authorized the utilization of Basic Excise Duty credit for discharging Additional Excise Duty on the finished product. The appellant relied on Notification No. 21/99, emphasizing the specific provisions allowing such utilization.

4. The appellant further supported their argument by referring to a clarification from the Department of Revenue, highlighting the permissibility of utilizing Basic Excise Duty credit for paying Additional Excise Duty. The appellant sought restoration of the amount if not permitted to debit Additional Excise Duty against Basic Excise Duty credit.

5. The discussion also addressed the difference in utilizing Basic Excise Duty credit on capital goods for paying Additional Excise Duty, with arguments presented by both parties regarding the legal position on this matter.

6. The Tribunal analyzed the relevant rules and notifications, concluding that the appellant was not entitled to use Basic Excise Duty credit for paying Additional Excise Duty on cotton yarn and blended yarn. The appeal of the appellant was rejected, but the amount debited for payment of duty on the final product was ordered to be restored. The appeal of the Revenue, regarding the credit of duty taken on capital goods, was allowed based on the legal interpretation provided.