2001 (10) TMI 1018 - AT - Central Excise

Summary

Issues:
Appeal against duty demand under Rule 57-I of Central Excise Rules, 1944 for waiver of pre-deposit and stay of recovery. Disallowed deemed Modvat credit on inputs supplied by iron & steel manufacturers under Compounded Levy Scheme. Disagreement over certification by Range Officer for duty discharge. Validity of duty payment before final determination of annual capacity of production by input-manufacturers.

Analysis:
The appeal arose from a demand of duty under Rule 57-I of the Central Excise Rules, 1944, with the applicants seeking waiver of pre-deposit and stay of recovery. The dispute centered around the disallowed deemed Modvat credit on inputs supplied by iron & steel manufacturers under the Compounded Levy Scheme. The lower authorities denied the credit due to lack of certification from Range Officers confirming duty discharge by the input-manufacturers.

The advocate for the applicants argued that the notification did not require such certification and emphasized that the actual duty paid by the manufacturers was irrelevant as the deemed credit was fixed at 12% of the invoice price. The applicants had taken credit from two manufacturers during a specific period, and while one invoice clearly stated duty discharge, the other indicated pending discharge. However, the latter was supported by a certificate from the manufacturer confirming duty payment.

The Department contended that duty payment before finalization of annual capacity of production was not a valid discharge as per the notification. They defended the orders passed by the lower authorities and disputed the existence of a strong prima facie case in favor of the applicants. The Tribunal examined the notification provisions, highlighting that it allowed deemed Modvat credit for inputs from manufacturers under the Compounded Levy Scheme based on provisional duty payments.

The Tribunal found that the controversy over final annual capacity did not invalidate the provisional duty payments made by the input-manufacturers. It concluded that the requirement of certification by Range Officers was not explicitly mandated by the notification. While one invoice explicitly declared duty discharge, the other lacked such a statement but was supplemented by a certificate confirming duty payment. The Tribunal considered this supplementary certificate as a valid declaration for the notification's purpose, establishing a strong prima facie case for the applicants. Consequently, the application was allowed unconditionally, and the appeal was directed to proceed accordingly.