2002 (7) TMI 619 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on capital goods.
2. Barred by limitation - show cause notice issued after six months.

Analysis:

Issue 1: Denial of Modvat credit on capital goods

The Appellate Tribunal CEGAT, Kolkata dealt with the confirmation of duty amounting to Rs. 4,42,306.35 against the appellants due to the denial of part of the Modvat credit. The denial was based on the appellants availing credit for 100% CVD paid on capital goods, contrary to the entitlement of 75% credit as per Notification No. 6/97-C.E. (N.T.), dated 1-3-97. The advocate for the appellants argued that the notification came into effect from 1-3-97, while the capital goods were imported before this date. The credit was taken post 1-3-97, upon installation of the goods, as per Modvat provisions. The Revenue contended that the appellants became eligible for credit in 1999 when the notification was in force, regardless of the import date. The Tribunal observed that credit accrues only upon installation or use of goods in manufacturing. The appellants' right to credit arose post installation in 1999, aligning with the notification in effect. Thus, the Tribunal upheld the denial of excess credit, rejecting the appellants' claim based on the installation date.

Issue 2: Barred by limitation - show cause notice issued after six months

Regarding the limitation issue, the appellants argued that a show cause notice issued for a duty of around Rs. 92,000 was time-barred as it exceeded six months from the RT-12 returns filing date. However, they failed to provide evidence of the filing date, leading to uncertainty. The Tribunal, in the interest of justice, granted the appellants an opportunity to present the necessary documents to the adjudicating authority for a fresh decision on the limitation aspect. This approach aimed to ensure a fair assessment of the limitation issue concerning the specific duty amount, allowing for a more informed decision. Consequently, the appeal was disposed of with this direction for further review on the limitation contention.

This comprehensive analysis of the judgment highlights the Tribunal's considerations on the denial of Modvat credit and the limitation aspect, providing a detailed overview of the legal reasoning and decisions made in the case.