2004 (2) TMI 549 - AT - Central Excise

Summary

Issues:
1. Availing Modvat facility under Rule 57A of the Central Excise Rules, 1944.
2. Duty payment requirement under Notification No. 175/86 for manufacturers opting for the Modvat scheme.
3. Verification of inputs used in the manufacture of finished products under the Modvat scheme.

Analysis:
1. The judgment revolves around the respondents, who are manufacturers of textile machines and parts falling under Chapter Heading 84 of the Central Excise Tariff Act, 1985, and are availing the Modvat facility under Rule 57A of the Central Excise Rules, 1944. They started availing the Modvat facility on 9-3-93 by taking credit for Electric Motors and other inputs. The Assistant Collector demanded Rs. 17,016, which was confirmed. The Commissioner (Appeals) dropped the proceedings, but the issue was brought to appeal.

2. The key issue addressed was the duty payment requirement under Notification No. 175/86 for manufacturers opting for the Modvat scheme. The notification mandates duty payment from the date of opting for the Modvat scheme. The Revenue contended that duty payment is necessary once the Modvat scheme is chosen, regardless of the direct correlation between inputs and finished products. The Tribunal upheld the Revenue's argument, emphasizing the importance of complying with the notification's language and the timing of availing the Modvat credit.

3. The judgment also delves into the verification of inputs used in the manufacture of finished products under the Modvat scheme. Despite the absence of anyone representing the respondents, the Tribunal highlighted that the date of filing for Modvat credit and availing the credit were crucial factors. The Tribunal found merit in the Revenue's argument that duty payment is mandatory upon opting for the Modvat scheme, irrespective of the direct link between inputs and finished goods. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the Revenue.