2008 (4) TMI 191 - AT - Central Excise

Appellant took transitional Credit in respect of the duty-paid inputs (used in the manufacture of final products) lying in stock on March 1, 1994 since appellant duly filed declaration u/r 57G on 28.3.94 and only after getting acknowledgement from jurisdictional assistant commissioner credit was utilized on inputs received between 1.3.94 to 30.3.94, credit can not be denied appellants not followed the appropriate procedure laid down in the Central Excise Rules, 1944, penalty is imposable

Summary

Issues:
1. Challenge to the first Appellate Order confirming the disallowance of transitional credit under Rule 57H.
2. Alleged irregular availing of Modvat Credit and penalties imposed under Rule 173Q.
3. Eligibility and availing of transitional Modvat Credit under Rule 57H.
4. Reversal of transitional credit amounts and compliance with procedural requirements.
5. Dispute over the correctness and validity of Modvat Credit availed.
6. Assessment of the evidence presented by both parties.

Issue 1: Challenge to the first Appellate Order
The Appellant challenged the first Appellate Order, which confirmed the disallowance of transitional credit under Rule 57H. The Appellant argued that the Order was cryptic and prayed for setting it aside.

Issue 2: Alleged irregular availing of Modvat Credit and penalties
The Adjudicating Authority found that the Appellant had irregularly availed of Modvat Credit under Rule 57H, totaling a significant sum. Penalties were imposed under Rule 173Q for late submission of returns and alleged irregular credit availing.

Issue 3: Eligibility and availing of transitional Modvat Credit
The Appellant became eligible to avail Modvat Credit on duty-paid input materials following the imposition of Central Excise Duty and extension of the Modvat Credit Scheme. Transitional credits were availed and declarations filed as per the rules.

Issue 4: Reversal of transitional credit amounts and compliance
The Appellant reversed certain credit amounts in 1995 upon noticing document irregularities. The Appellant argued that the credit availed was legal and proper, complying with Rule 57H procedural requirements.

Issue 5: Dispute over correctness and validity of Modvat Credit
The Appellant contended that the Modvat Credit availed was proper, supported by detailed accounts and Chartered Accountant reports. The Appellant maintained that the credit disallowed was already reversed, and no irregularity existed.

Issue 6: Assessment of evidence presented
Both parties presented evidence regarding the transitional credit availed. The Revenue argued based on partial evidence, while the Appellant highlighted comprehensive reports and compliance with procedural requirements. The Tribunal noted the detailed accounts maintained by the Appellant but upheld penalties for procedural non-compliance.

In the final judgment, the Tribunal partly allowed the appeal, upholding penalties imposed on the Appellant. The Tribunal appreciated the detailed accounts maintained by the Appellant but noted procedural lapses, leading to penalties. The Appellant's compliance with rules and reversal of credit amounts were acknowledged, but penalties were upheld for non-compliance with procedural requirements.