2006 (10) TMI 430 - AT - Central Excise

Summary

Issues involved: Confirmation of duty demand, imposition of personal penalty, denial of modvat credit, validity of show cause notice issued under Rule 57I.

Confirmation of duty demand and denial of modvat credit:
The authorities confirmed a duty demand of Rs. 1,01,062 along with a personal penalty, denying the benefit of modvat credit for inputs availed during a specific period. The denial was based on the grounds that the credit was taken without physically receiving the inputs. The show cause notice was issued on 17/05/2002 and adjudicated on 23/10/2002. The appellant contested the demand on the merits, asserting that the goods were physically received, properly accounted for, used in manufacturing final products, and the invoices were defaced by the jurisdictional range Superintendent.

Validity of show cause notice issued under Rule 57I:
The appellants also challenged the demand on the basis that the show cause notice was issued under Rule 57I, which was substituted by new Cenvat Rules effective from 31/03/2000. They argued that since Rule 57I was not in existence at the time of the notice, it should be struck down. Citing a previous Tribunal decision, they contended that the law applicable at the time of the notice issuance must be invoked. As Rule 57I was not in the statute book without a saving clause, the show cause notice could not be sustained. The Tribunal found merit in this argument and held that since the notice was issued under a non-existent rule, it cannot be upheld. Consequently, the appeal was allowed, and the impugned order was set aside.