2003 (2) TMI 394 - AT - Central Excise

Summary

Issues:
Validity of Order-in-Appeal disallowing credit balance utilization.

Analysis:
The appellants contested the disallowance of utilizing the credit balance in their statutory records, arguing that they were entitled to use it for discharging full duty on goods cleared after opting out of the Modvat scheme. The dispute centered around whether the credit balance automatically lapsed upon opting out of the scheme. The authorities cited the Bangalore Body Builders case and Rule 57H(5) to support the contention that the credit lapsed upon opting out. However, the appellants relied on Eicher Motors Ltd. and CCE, Pune v. Dai Ichi Karkaria Ltd. cases, emphasizing that Modvat credit was akin to tax paid and could be utilized until fully adjusted. The Tribunal noted that the Bangalore Body Builders case observations on credit lapse were made during a stay application, not on merits, and Rule 57H(5) did not apply as the appellants did not opt for duty exemption post opting out of the scheme.

The Tribunal highlighted the Apex Court's stance that Modvat credit was indefeasible and could be used until fully adjusted, rejecting the automatic lapse argument. The appellants' right to adjust the credit balance for duty payment on cleared goods post opting out of the scheme was upheld. The Tribunal differentiated cases where credit lapse was upheld due to opting for duty exemption, which was not the appellants' situation. The impugned order disallowing credit balance utilization was deemed legally unsustainable, and the appeal was allowed in favor of the appellants with consequential relief as per the law.