2006 (12) TMI 271 - AT - Central Excise

Summary

Issues involved: Appeal against order-in-appeal confirming demand and penalty u/s Central Excise Rules, 1944.

Summary:
1. The appellant, a manufacturer of embroidered products, appealed against the confirmation of demand and penalty imposed for wrong utilization of Modvat credit. The appellant contended that denial of Modvat credit and time-barred demand were unjust. The Commissioner (Appeals) upheld the order-in-original with modification on penalty. The appellant challenged this decision.

2. The appellant argued that denial of Modvat credit was incorrect and the duty imposition based on production capacity was ultra vires. The respondent cited a tribunal decision and a High Court case to support their stance on Modvat credit and duty imposition.

3. The Tribunal noted that the appellant was discharging duty under Rule 96ZH and availed Modvat credit under Rule 57Q. The proviso under Rule 96ZH precluded Modvat credit under certain rules. Citing a previous tribunal decision, the appeal was found meritless.

4. The show cause notice for demand was within the time limit specified u/s Section 11A of the Central Excise Act, 1944. The duty demand was for clearances without duty payment, not for Modvat credit reversal, leading to the appeal's failure on this ground.

5. The imposition of duty based on production capacity was deemed valid as per Rules 96ZH to 96ZM introduced under the Central Excises and Salt Act, 1944. The optional nature of duty discharge under these rules negated the appellant's claim of ultra vires imposition.

6. Referring to a High Court ruling, the Tribunal upheld the imposition of duty under the mentioned rules. The appeal was dismissed based on the findings and facts presented.

(Order pronounced on 8-12-2006)