2004 (2) TMI 497 - AT - Central Excise

Summary

Issues:
1. Dispensing with the condition of pre-deposit of duty amount.
2. Claim of Modvat credit by the appellant.
3. Interpretation of Notification No. 58/97-C.E.
4. Availability of deemed credit at 12% of the price declared in the invoice.
5. Application of Para 2 and Para 4 of the said notification.

Analysis:

1. The appellant sought dispensation of the pre-deposit condition of duty amounting to Rs. 7,56,221.00 by disallowing the Modvat credit claimed at 12% of the price declared by the input manufacturer in their invoices as per Notification No. 58/97-C.E., dated 30-8-1997.

2. The appellant, a manufacturer of rods and bars under the Compounded Levy Scheme, was required to pay duty post the scheme's withdrawal. Claiming Modvat credit on existing input stock as of 1-4-2000, the appellant referenced a Board Circular allowing such credit. Revenue authorities initially allowed credit at Rs. 750 per M.T., reflecting the actual duty paid by the inputs manufacturer, contrary to the appellant's claim for credit at the deemed rate of 12%.

3. The Tribunal analyzed the provisions of Notification No. 58/97-C.E. The appellant contended that the deemed credit at 12% of the invoice price should be granted, while Revenue argued for allowing credit based on actual duty paid. The Tribunal noted that Para 2 of the notification permits credit at the deemed rate, but Para 4 restricts this benefit to cases where the manufacturer receives inputs directly from the manufacturer's factory under a proper invoice.

4. The Tribunal's prima facie view favored the appellant, emphasizing that a combined reading of Para 2 and Para 4 indicates that credit at 12% of the price declared in the invoice should be available to manufacturers of final products. It highlighted that if the Revenue's stance of allowing credit based on actual duty paid is accepted, the purpose of Para 2, which provides for deemed credit, would be defeated.

5. Consequently, the Tribunal allowed the stay petition unconditionally and scheduled the main appeal for final disposal, acknowledging the merits in the appellant's case based on the interpretation of Notification No. 58/97-C.E. The judgment clarified the application of Para 2 and Para 4, affirming the availability of deemed credit at 12% of the invoice price for manufacturers of final products.