2011 (3) TMI 1293 - AT - Central Excise

MODVAT Credit of duty paid on the inputs which were in stock - Notification No. 6/03-C.E., dated 1-3-02, w.e.f. 1-3-03 benefi claimed - Held that - The condition against said S.No. required that no credit of duty paid on the duty stand availed by the assessee. The appellants, in terms of fulfilment of such condition, reversed the credit of Rs. 2,58,746/- on their own. The dispute relates to the credit of duty involved in respect of the input lying in stock as on 1-3-03. Inasmuch as the said inputs were used by the appellant in the manufacture of their final product, which were cleared in terms of said S.No. 182 of the notification, they were required to Reverse the MODVAT Credit of duty paid on such inputs, to fulfil the condition of S.No. 182 of Notification. As such, we do not find any infirmity in the view adopted by Commissioner (Appeals), vide which he has upheld the Revenue s stand of reversal of MODVAT Credit of Rs. 1,71,021/- - Decided against the assessee

Issues:
1. Availing benefit of Notification No. 6/03-C.E. dated 1-3-02.
2. Reversal of unutilized credit due to conditions of Notification.
3. Dispute regarding MODVAT Credit on inputs as of 1-3-03.
4. Original Adjudicating Authority's decision.
5. Appeal before Commissioner (Appeals) by Revenue.
6. Applicability of S.No. 181 and S.No. 182 of Notification No. 6/03.
7. Interpretation of conditions under S.No. 182.
8. Requirement to fulfill conditions of S.No. 182.
9. Decision on reversal of MODVAT Credit.
10. Upholding or rejecting the appeal.

Analysis:

1. The appellant was engaged in manufacturing brass sheets and circles, availing benefits under Notification No. 6/03-C.E., dated 1-3-02, with a concessional rate of Excise duty. The condition for this benefit was not availing any credit on inputs, leading to the reversal of unutilized credit.

2. The dispute arose concerning the MODVAT Credit on inputs as of 1-3-03, with a show cause notice issued to reverse the credit attributable to inputs and goods in stock. The Original Adjudicating Authority initially dropped the notice, but the Revenue appealed, leading to the present case.

3. The Original Adjudicating Authority's decision was challenged before the Commissioner (Appeals), who ruled in favor of the Revenue, requiring the appellant to reverse the remaining credit of Rs. 1,71,021/- on inputs in stock, leading to the current appeal.

4. The appellant argued that their product was correctly classified under S.No. 181, which did not require reversal of MODVAT Credit. They cited relevant case law and notifications to support their position.

5. The Revenue contended that the appellant had opted for S.No. 182 initially and was duty-bound to fulfill its conditions, including not availing credit on inputs, justifying the reversal of credit on inputs used in manufacturing.

6. The Tribunal noted the appellant's change in option from S.No. 182 to S.No. 181 and concluded that during the relevant period, the goods were cleared under S.No. 182, requiring compliance with its conditions.

7. The central issue was whether the appellant, having assessed goods under S.No. 182, needed to fulfill its conditions, specifically Condition No. 44, which mandated no credit on inputs and full duty payment.

8. Condition No. 44 required no credit on inputs and full duty payment, leading the appellant to reverse the credit voluntarily. The dispute centered on the MODVAT Credit on inputs used in manufacturing under S.No. 182.

9. The Tribunal upheld the Commissioner (Appeals)' decision, affirming the need to reverse the MODVAT Credit on inputs to comply with the conditions of S.No. 182, leading to the rejection of the appellant's appeal.

10. The Tribunal upheld the impugned order, supporting the reversal of MODVAT Credit and rejecting the appellant's appeal, concluding the legal judgment.

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