2004 (5) TMI 411 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit taken by the appellant in PLA.
2. Rejection of appellant's plea for refund of debit made in PLA.

Analysis:
1. The appellant sent inputs for processing to a job worker after taking Modvat credit and paying 10% of the credit through their PLA account. The prescribed procedure required debiting RG 23A Part II for 10% of the credit taken and crediting back the same amount upon receiving the processed goods. However, the appellant did not adhere to this procedure, leading to the disallowance of credit in PLA by the department. The Commissioner (Appeals) offered the appellant to take credit in RG 23A Part II, but the appellant insisted on a refund of the amount debited in PLA, which was rejected. The appellant argued that the challan mentioned the PLA entry for debiting 10% credit, but the Board's letter and trade notice were not disclosed to them. The Tribunal held that failure to follow the prescribed procedure and making a debit entry in PLA for purposes other than duty payment on goods for home consumption was not permissible. The appellant's rejection of the offer to take credit in RG 23A Part II led to the rejection of their appeal.

2. The appellant contended that they were entitled to a refund of the debit made in PLA, citing non-disclosure of the Board's letter and trade notice. However, the Tribunal ruled that the appellant's failure to subscribe to or obtain a copy of the trade notice did not absolve them from following the prescribed procedure. It was noted that debits in the PLA, apart from duty payments for goods cleared for home consumption, were not permitted. The department's offer to allow credit in RG 23A Part II instead of PLA was rejected by the appellant, claiming the credit would be of no use to them. Consequently, the Tribunal upheld the rejection of the appellant's plea for a refund of the debit made in PLA, ultimately leading to the dismissal of the appeal.