2005 (3) TMI 678 - AT - Central Excise

Summary

Issues:
Whether Modvat credit of duty paid on inputs is available during March 2000.

Analysis:
The case involved an appeal by M/s. Magnum Papers Ltd. regarding the availability of Modvat credit of duty paid on inputs during March 2000. The Appellant's representative argued that they were entitled to the credit as per Notification No. 6/2000, which granted exemption on the first clearance of paper and paperboard. The Department had disallowed the Modvat credit on inputs contained in goods in stock as of March 1, 2000. The Appellant contended that the exemption did not mention any restriction on availing Modvat credit, unlike other products under the same notification. They maintained that the credit was not wrongly taken and no penalty should be imposed.

The Department, represented by Shri H.C. Verma, supported the findings of the impugned order disallowing the Modvat credit. The Tribunal considered both arguments and noted that the Appellants availed Modvat credit under Rule 57A and exemption under Notification No. 6/2000 from March 1, 2000. The Tribunal disagreed with the Appellant's contention that the notification did not restrict Modvat credit availment. Rule 57H(7) mandated that manufacturers opting for duty exemption pay an amount equivalent to the credit on inputs used in finished goods in stock upon opting for exemption, with any remaining credit lapsing.

The Tribunal found that the Appellants fell under the purview of Rule 57H(7) as they availed Modvat credit, opted for duty exemption under the notification, and the notification provided exemption based on clearance quantity. The Tribunal upheld the disallowance of Modvat credit based on the rule's provisions. However, they agreed with the Appellant that no penalty should be imposed, leading to the setting aside of the penalty. Thus, the appeals were rejected with the modification of penalty imposition.

This detailed analysis of the judgment highlights the arguments presented by both parties, the relevant legal provisions, and the Tribunal's decision regarding the availability of Modvat credit during March 2000 for M/s. Magnum Papers Ltd.