2011 (5) TMI 502 - AT - Central Excise

MODVAT Credit - Inputs - whether Superintendent being a Central Excise officer, is empowered to issue Show Cause Notice ? - Held that - Ld.Advocate has not shown any provisions of law, de-barring the Superintendent from issuance of Show Cause Notice. Reliance on the circular, which in any case, was issued only to emphasize the fact that in the case of extended period, only Collectors should issue Show Cause Notices, cannot be pressed to service on the use of expression in all other cases, the adjudicating officer should issue Show Cause Notice - Find that Circular No.66/88 of such nature are only for internal administrative purpose and for convenience and smooth working of the administration - The appeal is, accordingly, rejected.

Summary

Issues:

1. Availment of CENVAT Credit on grey fabrics.
2. Entitlement to deemed MODVAT Credit.
3. Validity of Show Cause Notice issued by Superintendent.
4. Applicability of Circular No.66/88 for issuance of Show Cause Notice.
5. Empowerment of Superintendent to issue Show Cause Notice.

Analysis:

1. The appellant, engaged in processing fabrics, availed CENVAT Credit on grey fabrics as per Rule 57A. A Notification No.29/96-CE(NT) granted deemed MODVAT Credit to processors of grey fabrics. The appellant availed deemed credit upon clearance of processed fabrics.

2. Proceedings were initiated against the appellant due to availing actual MODVAT Credit on grey fabrics, challenging their entitlement to deemed MODVAT Credit. The original adjudicating authority confirmed a demand of Rs.54,738/- along with a penalty of Rs.6,500/-. The Commissioner(Appeals) upheld this decision, leading to the present appeal.

3. Para 4 of the notification stated that a manufacturer availing credit under Rule 57A is not entitled to deemed credit. As the appellant had already availed actual duty credit on grey fabrics, they were not eligible for deemed credit as per the notification.

4. The appellant argued that the Show Cause Notice issued by the Superintendent was not in accordance with the law, citing Circular No.66/88. The Circular suggested that in cases of wrong MODVAT Credit, only Collectors should issue notices. The appellant contended that as the Assistant Commissioner was the adjudicating officer, the Superintendent's notice was unjustified.

5. The Revenue argued that Circulars are for administrative purposes and not legally binding. As no specific law mandated only adjudicating officers to issue notices, the Superintendent's notice was valid. The Superintendent, being a Central Excise officer, had the authority to issue the Show Cause Notice.

6. The Tribunal agreed with the Revenue, emphasizing that Circulars are for administrative convenience. The reliance on Circular No.66/88 was deemed inappropriate as there was no legal prohibition on the Superintendent issuing the notice. The appeal was rejected based on these findings.