2002 (4) TMI 662 - AT - Central Excise

Summary

Issues:
Whether capital goods credit availed for Basic Excise duty can be used for Additional Excise duty under the Additional Duties of Excise (Goods of Special Importance) Act.

Analysis:
The appeals involved a dispute regarding the utilization of Modvat credit of Central Excise duty paid on capital goods for the payment of Additional Excise duty. The appellant, engaged in manufacturing Sugar and Molasses, contended that the Modvat credit was rightfully taken at the time of receiving duty-paid capital goods. The Asstt. Commissioner disallowed the credit, stating it was used for Additional Excise duty, which was not permitted under Notification No. 5/94. The Commissioner (Appeals) upheld this decision, ruling such utilization was impermissible under the Modvat Rules.

The appellant argued that Rule 57S(2) of the Central Excise Rules allowed the credit of specified duty on capital goods to be used for paying duty on final products, waste arising during manufacture, or on the capital goods themselves if removed. Citing precedents like Coats Viyella India Ltd. and CCE v. Vijay Kumar Mills Ltd., the appellant contended that Additional Excise Duty is an additional duty annexed to the basic duty at the assessment point. However, the Revenue, represented by Shri Jagdish Singh, supported the findings of the impugned order.

Upon considering the submissions, the Tribunal referred to Rule 57Q and Rule 57S(2) of the Central Excise Rules. It noted that there was no notification other than No. 5/94 restricting the use of capital goods credit for Additional Excise duty. Rule 57S(2) explicitly allowed utilizing the credit for duty on final products without specifying any restrictions. As Notification No. 5/94 only pertained to Modvat credit on excisable goods used as inputs, not on capital goods, the Tribunal held that in the absence of such restrictions, the Revenue could not prevent the use of Basic Excise duty credit on capital goods for Additional Excise duty. Consequently, the impugned order was set aside, and the appeal was allowed.