2004 (1) TMI 536 - AT - Central Excise

Summary

Issues:
Challenge to Order-in-Appeal upholding demand of expunction of excess credit amounting to Rs. 34,211/- being the 5% differential credit.

Detailed Analysis:

1. Issue of Modvat Credit Restriction:
The appellants challenged the order of the lower original authority, which rejected their appeal regarding the demand of expunction of excess credit. The dispute arose from the restriction on availing Modvat credit of the duty paid on inputs, particularly the 5% differential credit. The restriction was imposed through Notification No. 5/94-C.E. (N.T.), dated 1-3-1994, amended by Notification No. 14/98-C.E. (N.T.), dated 2-6-1998, limiting credit to 95% of the duty paid on inputs. Subsequently, Notification No. 21/99-C.E. (N.T.), dated 28-2-1999, removed this restriction. The appellants had availed 95% credit during the restricted period and faced a show cause notice for exceeding this limit.

2. Contentions of the Appellants:
The appellants argued that they should be allowed to avail the full Modvat credit post the removal of the 95% restriction, even for inputs received before 28-2-1999. They contended that the Trade Notice No. 19/99, dated 28-2-1999, should not override the existing provisions. Citing relevant case laws, they emphasized the importance of the date of taking credit in RG 23 for determining eligibility percentage.

3. Revenue's Defense:
The Revenue defended the impugned order, stating that the removal of the 95% restriction through Notification No. 21/99 should not apply retroactively to inputs received and credits availed before 28-2-1999. They highlighted the Trade Notice No. 19/99, which clarified the application of revised Modvat provisions. The Revenue argued that case laws cited by the appellants were not directly relevant to the present case.

4. Judgment and Analysis:
The Tribunal analyzed the notifications, trade notice, and case laws presented by both parties. It concluded that the restoration of 100% Modvat credit through Notification No. 21/99 from 28-2-1999 did not entitle the appellants to extra credit for inputs received and credits availed before this date. The Tribunal emphasized that the law applicable at the time of credit availing should govern the eligibility. It rejected the appellants' argument that the Trade Notice overruled existing provisions. Referring to a previous case, the Tribunal upheld the demand of expunction of excess credit, stating that the appellants had already availed 95% credit before the removal of the restriction.

5. Conclusion:
The Tribunal dismissed the appeal, upholding the order of demand for expunction of the excess credit amount. It clarified that the removal of the 95% restriction did not retroactively apply to inputs received and credits availed before the effective date of the notification. The judgment highlighted the importance of adhering to the law in force at the time of credit availing and utilization, ultimately ruling in favor of the Revenue's position.