2004 (10) TMI 448 - AT - Central Excise

Summary

Issues:
1. Interpretation of Modvat scheme for duty liability on goods cleared before its introduction.

Analysis:
The appeal was filed against an order-in-original by the Commissioner (Appeals) requiring the appellants to pay a specified amount in accordance with a previous order by the Commissioner of Central Excise, Pune, confirmed by the Tribunal. The Commissioner (Appeals) directed the payment to be made through debit in the PLA or TR-6 challan, not accepting the debit made in the RG-23A Part-II account as a legitimate payment. The appellants argued that the demand stands paid by making the debit in the RG-23A Part-II account.

The key issue before the Tribunal was whether the appellants were entitled to discharge duty liability for clearances made before the introduction of the Modvat scheme by making a debit in the RG-23A Part-II account. The Tribunal considered the provisions of Rule 57F, which govern the utilization of credit, stating that the credit of duty must be used towards payment of duty on final products in or in relation to the manufacture of inputs intended to be used as declared. The Tribunal noted that the inputs on which credit was taken were not used in the final products cleared before the Modvat scheme's introduction. Therefore, the credit earned post-implementation of the scheme could only be used for duty on final products cleared after receiving those inputs.

Consequently, the Tribunal upheld the lower authorities' decision to require payment of outstanding duty only through PLA or cash payment under TR-6 challan. The appeal was dismissed, finding no merit in the appellants' arguments.