2005 (12) TMI 417 - AT - Central Excise

Summary

Issues:

1. Interpretation of the restriction on the quantum of credit imposed by Notification No. 14/97 for Modvat credit under Rule 57B of C.E. Rules, 1944.

Detailed Analysis:

Issue 1: Interpretation of the restriction on Modvat credit under Rule 57B

The appeal was filed against the Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals), Hyderabad. The central issue was whether the restriction on the quantum of credit under Notification No. 14/97 applied to furnace oil when Modvat credit was taken under Rule 57B. The learned Advocate for the appellants argued that the restriction was not applicable before 2-6-1998, as per the proviso introduced, indicating that the restriction under Notification No. 14/97 was not applicable to credit under Rule 57B. It was highlighted that Rule 57B starts with a non obstante clause, excluding the application of Rule 57A.

In the decisions cited by the Revenue, it was held that the restriction under Rule 57A(3) applied to credit taken under Rule 57B despite the non obstante clause. However, the Tribunal's decision in the case of Lloyds Steel was brought up, where it was emphasized that the restriction under Notification No. 14/97 was not applicable to credit under Rule 57B. The Tribunal found that the decision in the Lloyds Steel case thoroughly addressed the issue, distinguishing it from the Jindal Polymer case. It was noted that the Tribunal in the Lloyds Steel case did not consider the amendment made on 2-6-1998, which indicated that the earlier decision might not be correct. The Tribunal agreed with the interpretation of Rule 57B presented by the appellants, ruling that the restriction under Notification No. 14/97 did not apply to the credit taken on furnace oil under Rule 57B, and consequently allowed the appeal with consequential relief.

In conclusion, the judgment clarified the interpretation of the restriction on Modvat credit under Rule 57B, determining that the restriction imposed by Notification No. 14/97 was not applicable to credit taken on furnace oil. The decision was based on a thorough analysis of relevant precedents and legal provisions, ultimately providing clarity on the issue at hand.