2004 (4) TMI 362 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit of Rs. 5,29,893.

Analysis:

1. Facts of the Case:
The appellants, engaged in manufacturing TV picture tubes, were exporting goods and claiming rebate under Rule 12 of Central Excise Rules. After claiming higher rebate, they were directed by Revenue to deposit the excess amount of rebate, which they did. Subsequently, the appellants sought Modvat credit for the deposited amount.

2. Appellant's Contention:
The appellant argued that they were wrongly directed to deposit the excess rebate amount and were entitled to the claimed rebate. Citing a Tribunal decision, they justified taking the Modvat credit.

3. Revenue's Contention:
The Revenue maintained that the appellant had claimed a higher rebate amount, leading to the directive to deposit the excess. The Revenue contended that the appellant cannot challenge the directive in the current proceedings and emphasized that the disputed amount did not pertain to duty on inputs, hence not eligible for credit.

4. Adjudication:
The Tribunal noted that the appellant had indeed filed for excess rebate, was directed to deposit the surplus amount, and complied without challenging the directive. The Tribunal agreed with the Revenue that the appellant could not contest the correctness of the directive in the current proceedings. Moreover, the Tribunal emphasized that Modvat credit is permissible only for duty paid on inputs used in manufacturing final products, not for excess rebate payments.

5. Decision:
Considering the lack of legal provision entitling the appellant to claim credit for the deposited excess rebate, the Tribunal dismissed the appeal. The Tribunal held that the appellant failed to demonstrate eligibility for such credit under Modvat provisions, leading to the rejection of the appeal.

In conclusion, the Tribunal upheld the disallowance of Modvat credit for the excess rebate amount, emphasizing the lack of legal basis for the appellant's claim and affirming that Modvat credit is applicable only to duty paid on inputs used in manufacturing final products.