2009 (1) TMI 732 - AT - Customs

Summary

Issues involved: Interpretation of Amnesty Scheme for reversal of Modvat credit and interest u/s Notification No. 203/92-Cus.

The judgment by the Appellate Tribunal CESTAT MUMBAI involved a case where the assessee debited the Modvat credit initially availed by them for inputs used in manufacturing export products covered by an Advance Licence under Notification No. 203/92-Cus. The assessee reversed the Modvat credit along with interest, albeit with a delay of about 8 days, attributing the delay to lack of clarity on the applicability of the Amnesty Scheme announced by the CBEC. The Commissioner dropped the demand against the respondent considering all the facts presented.

The Revenue contended in their appeal memo that since the interest was deposited beyond the expiry date of 31-1-97 as per the Amnesty Scheme, the benefit of the scheme should not be extended to the assessee. They relied on the Supreme Court's decision in Bharati Telecom Ltd. v. CC. However, the learned Advocate referred to the interpretation of the same Supreme Court decision by the Madras High Court in Shasun Drugs & Chemicals v. CESTAT, Chennai, where it was held that reversal of credit partly before and partly after the cut-off date is in accordance with the scheme.

The Tribunal noted that in the present case, the entire credit was reversed before the cut-off date, with only a minor delay of around 8 days in reversing the interest. Citing precedent from Proseal Closures Pvt. Ltd. v. CC, Airport, Mumbai, the Tribunal agreed that such a small delay in reversing interest does not disentitle the assessee from the benefit of the Amnesty Scheme. Consequently, the Tribunal found no issues with the Commissioner's order and rejected the appeal filed by the Revenue.