2003 (1) TMI 564 - AT - Central Excise

Summary

Issues:
- Eligibility of the assessee to avail credit of duty paid on inputs, specifically AED (T) credit for payment of duty on final products.
- Interpretation of Notification No. 21/99 and Rule 57F(12) of the Central Excise Rules, 1944.
- Whether one-to-one correlation is necessary for availing Modvat credit.

Eligibility of Assessee to Avail Credit:
The appeal revolved around the eligibility of the assessee to utilize the AED (T) credit for paying duty on final products, specifically cotton yarn and blended yarn. The Revenue contended that the assessee was not entitled to credit as the duty on Spandex yarn was not leviable with AED (T). However, the Respondent argued that there was no requirement for a one-to-one correlation for availing Modvat credit, citing Notification No. 21/99 and Rule 57F(12) which allowed the credit to be used for payment of any specified duty. The Commissioner (Appeals) supported this view and held that since the assessee was using the AED (T) credit for duty payment on final products, the credit could not be denied, emphasizing the lack of need for a one-to-one correlation.

Interpretation of Notification and Rule:
The judgment delved into the interpretation of Notification No. 21/99 and Rule 57F(12) of the Central Excise Rules, 1944. The Respondent's consultant highlighted the provisions stating that specified duty paid on inputs could be utilized for excise duty payment on final products, as long as the duties were accounted for separately. The consultant argued that the assessee's use of AED (T) credit for duty payment on cotton yarn and blended yarn, both final products, was permissible under the rules. The Commissioner (Appeals) agreed with this interpretation, emphasizing that AED (T) credit could be used for AED (T) payment, supporting the Respondent's position.

One-to-One Correlation for Modvat Credit:
The issue of whether a one-to-one correlation was necessary for availing Modvat credit was addressed in the judgment. The Respondent's consultant argued that such correlation was not mandatory, and the assessee's utilization of AED (T) credit for duty payment on final products was valid. The Commissioner (Appeals) concurred, stating that there was no requirement for a one-to-one correlation, especially when the credit was being used for payment of duty on final products. The judgment upheld this view, rejecting the Revenue's appeal and sustaining the Commissioner (Appeals) order in favor of the assessee.

In conclusion, the judgment clarified the eligibility of the assessee to avail credit of duty paid on inputs, interpreting relevant notifications and rules while emphasizing the lack of necessity for a one-to-one correlation for utilizing Modvat credit. The decision supported the assessee's position, allowing the use of AED (T) credit for duty payment on final products and dismissing the Revenue's appeal.