2003 (10) TMI 555 - AT - Central Excise

Summary

Issues involved:
Whether payment of Additional Duties of Excise can be made out of the MODVAT Credit of the Basic Excise duty paid on capital goods and inputs.

Analysis:
The appeal filed by M/s. The Dhar Textile Mills Ltd. raised the issue of utilizing MODVAT Credit of Basic Excise duty for paying Additional Duties of Excise. The Tribunal analyzed Rule 57Q of the Central Excise Rules, 1944, which allows the manufacturer to use credit for duty payable on final products without specifying restrictions on the type of duty. Referring to a previous case, the Tribunal highlighted that there is no limitation on using specified duty credit for payment of other duties. The Tribunal noted that Notification No. 5/94-C.E. pertains to Modvat credit on excisable goods used as inputs, not capital goods. It emphasized that without restrictions, the Revenue cannot argue against using Basic Excise duty credit for Additional Excise duty. Disagreeing with the Commissioner (Appeals), the Tribunal clarified that there is no restriction in Notification No. 24/94(N.T.) on using Basic Excise duty credit for Additional Duties of Excise. The proviso to the Notification only limits the use of Additional Duty of Excise under specific Acts, not Basic Excise duty credit. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

This judgment clarifies the permissible use of MODVAT Credit of Basic Excise duty for paying Additional Duties of Excise. It emphasizes that Rule 57Q does not restrict the type of duty for which credit can be utilized. The Tribunal's interpretation of relevant notifications highlights that Basic Excise duty credit can be used for Additional Duties of Excise unless specifically restricted. By overturning the Commissioner (Appeals)'s decision, the Tribunal ensures consistency in applying the rules regarding the utilization of excise duty credits. This decision provides clarity on the scope of using credits and prevents arbitrary restrictions on manufacturers' ability to offset duties.