2005 (12) TMI 480 - AT - Central Excise

Summary

Issues:
- Liability to pay duty on inputs lying in stock as on 1-8-1997 under amended Rule 57F(17) of the Central Excise Rules, 1944.

Analysis:
The appeal was filed against the Order-in-Appeal dated 24-9-2003, which held the appellants liable to pay duty on inputs in stock as of 1-8-1997. The appellants, manufacturers of M.S. Ingots and Billets, were availing Modvat benefit. The products fell under Section 3A of the Central Excise Act from 1-8-97, subject to a compounded levy scheme. Notification No. 33/97 dated 1-8-97 amended Rule 57F(17), disallowing Modvat credit for unutilized inputs as of 1-8-97. A show cause notice demanded Rs. 6,46,771 for inputs in stock. The Order-in-Original confirmed the demand and imposed a penalty, which was partially upheld on appeal, reducing the penalty to Rs. 10,000. The Tribunal noted that the show cause notice misinterpreted the notification by seeking duty on inputs in finished goods and W.I.P., contrary to the Modvat scheme.

The Tribunal highlighted that the notification only addressed unutilized credit in the appellants' accounts, not duty on inputs in finished goods or W.I.P. Citing precedents like Kakda Rolling Mills v. CCE and CCE, JSR. v. Ravi Hi-Tech, the Tribunal emphasized that unutilized credit lapses, but there is no provision to demand duty on inputs in stock or finished goods. Relying on these decisions, the Tribunal found that only the unutilized credit in the books of account would lapse, not the duty on inputs in stock or W.I.P. Therefore, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal.