2008 (10) TMI 539 - AT - Central Excise

Summary

Issues:
1. Clearance of inputs on which Modvat was taken and cleared at a lower duty rate.
2. Confirmation of differential duty on final products labeled as grade 'B' and grade 'C'.

Issue 1:
The first issue in this case pertained to the clearance of inputs on which Modvat was taken and cleared at a lower duty rate. The Department contended that the appellant should have paid duty at a higher rate of 20% instead of 10% as the goods were deemed to have been manufactured by the appellant before a specific amendment. However, the appellant argued that the duty paid at 10% was correct based on the credit allowed for the inputs. The appellant relied on a decision by a Five Member Bench of the Tribunal, which clarified that the legal fiction of deemed manufacture by the input receiver aimed to collect excise duty not less than the credit allowed for the inputs. The Tribunal accepted the appellant's submission, setting aside the demand for the higher duty rate.

Issue 2:
The second issue revolved around the confirmation of differential duty on final products described as grade 'B' and grade 'C'. The Department raised concerns as the appellant did not provide gradewise details in the required registers, leading to the assumption that all products were of the highest grade 'A'. The appellant, on the other hand, explained that they used different grades of raw materials and some products were classified as lower grades due to quality considerations during manufacturing. They argued that there was no legal obligation to mention gradewise details in the registers. The Tribunal acknowledged the appellant's explanation, emphasizing that without legal requirements for gradewise mention, the Department's presumption that lower grades were actually higher grades could not be upheld. Consequently, the appeal was allowed, granting the appellant consequential relief.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issues of duty rates on cleared inputs and gradewise classification of final products, providing detailed analysis and legal reasoning for each issue before ultimately allowing the appeal with consequential relief.