2004 (7) TMI 408 - AT - Central Excise

Summary

Issues:
1. Rejection of Modvat credit on capital goods.
2. Claim for re-restoration of unutilized credit.
3. Interpretation of rules regarding credit utilization.
4. Effect of surrendering Central Excise registration.
5. Finality of transactions post full exemption introduction.

Analysis:
1. The appeal challenged the rejection of Modvat credit on capital goods by the order-in-appeal. The appellants had a balance credit of Rs. 1,48,899/- as on 31-3-2000 due to the restriction of only 50% credit availment on capital goods. They sought to avail the entire credit of duty paid on capital goods, which remained unutilized as on the mentioned date.

2. The Tribunal noted that the credit of duty is available for inputs unutilized in the manufacture of finished goods subjected to duty. Despite the absence of a one-to-one correlation, the goods must be utilized in manufacturing final products on which duty is paid. In this case, the capital goods were partially utilized before the full exemption introduction, leaving a balance of 50% credit unutilized.

3. The Tribunal emphasized that the transactions related to bringing in duty paid capital goods and their utilization in manufacturing duty-paying final goods were concluded upon the surrender of Central Excise registration. The re-introduction of duty on clocks in 2001-2002 did not allow for reopening of finalized transactions. The rules did not provide for reviving lapsed credit due to full exemption on finished goods.

4. Consequently, the Tribunal upheld the Commissioner (Appeals)'s findings, stating that no interference was warranted. The appeal was rejected based on the understanding that the credit balance remained unutilized due to the restriction in credit availment and the finality of transactions post-exemption introduction.