2004 (3) TMI 615 - AT - Central Excise

Summary

Issues:
1. Eligibility for Modvat credit under Notification No. 5/94-C.E.
2. Applicability of Rule 57F proviso added by Notification No. 11/95-C.E.
3. Bar of limitation for demand of Modvat credit.

Eligibility for Modvat credit under Notification No. 5/94-C.E.:
The case involved manufacturers of excisable goods seeking Modvat credit under Notification No. 5/94-C.E. The appellants utilized Modvat credit of duty paid on inputs for discharging liability on the final product, which was objected to by the department. The Commissioner of Central Excise held that the extended period of limitation was available to the department due to suppression of facts by the appellants. The Commissioner confirmed the demand, interest, and imposed a penalty. The appeal was made against this decision.

Applicability of Rule 57F proviso added by Notification No. 11/95-C.E.:
The appellants sought leave to raise additional grounds under Rule 11 of the CEGAT (Procedure) Rules, 1982, based on the proviso added to Rule 57F by Notification No. 11/95-C.E. This proviso allowed the utilization of specified duty credit on inputs received after a certain date towards payment of excise duty on other final products. The appellants argued that they were entitled to use the credit taken on inputs received after the specified date for payment of duty on other final products, even if the credit was not originally available for that purpose.

Bar of limitation for demand of Modvat credit:
The appellants contended that the demand was barred by limitation as the cross-utilization of credit was known to the department through monthly submissions of credit entries in the register. They argued that the department could clearly see the nature of duty paid on inputs and the credit taken. The Tribunal agreed with this argument, holding that the demand was indeed barred by limitation. As a result, the Tribunal set aside the duty and penalty, allowing the appeal on this ground without delving into the merits of the case.

This judgment addressed the eligibility for Modvat credit under a specific notification, the applicability of a rule proviso added by a subsequent notification, and the bar of limitation for the demand of Modvat credit. The Tribunal ruled in favor of the appellants on the issue of limitation, setting aside the demand and penalty.