2002 (3) TMI 730 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty on various inputs.
2. Reversal of Modvat credit on Tyre Cord Fabrics.
3. Reversal of Modvat credit on ADV Tyres.
4. Confirmation of demand on inputs attributable to scrap emergence.
5. Imposition of penalty and interest based on Modvat credit reversal.

Analysis:

Issue 1:
The Commissioner confirmed a demand of duty on various inputs availed by the appellants during a specific period. The demand included a personal penalty and interest under relevant rules. The appellants contested the demand, arguing that certain credits were taken as a protective measure and later reversed upon clarification by the Tribunal that the products were non-dutiable. The appellants also disputed the demand based on limitation grounds, stating that the data for computation was readily available to the Revenue.

Issue 2:
Regarding the reversal of Modvat credit on Tyre Cord Fabrics, the appellants explained that they had taken the credit but not utilized it due to the ongoing consideration of the dutiability of the final product. Once it was clarified that the product was non-dutiable, the credit was reversed. The Tribunal found no reason to interfere with this reversal.

Issue 3:
The demand of duty on ADV Tyres was contested by the appellants, who argued that the weight calculations by the Revenue were not representative of the actual weight of all the products. They maintained that the standard weight adopted by them was based on valid certification and disputed the demand on the basis of limitation as the Revenue was aware of the standard weight being used for credit reversal.

Issue 4:
The confirmation of demand on inputs attributable to scrap emergence and the reversal of Modvat credit on the final exempted product were also challenged by the appellants. They argued that the reversal was done correctly as per Modvat Rules and that any manufacturing loss was covered under relevant provisions. The Tribunal found the appellants' reasons for reversal on the lower side justifiable and held that the demands beyond a certain period were barred by limitation.

Issue 5:
The imposition of penalty and interest based on Modvat credit reversal was contested by the appellants, who argued that the provisions for penalty and interest were not applicable as the credit was correctly availed. The Tribunal agreed, stating that the demands were not justified and were also barred by limitation. Therefore, the penalty and interest were set aside.

In conclusion, the Tribunal allowed the appeal, setting aside most of the demands and penalties imposed on the appellants, except for a specific amount of duty that was uncontested and appropriately reversed by the appellants.