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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2000 (8) TMI AT This

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2000 (8) TMI 213 - AT - Central Excise

Issues involved:
Appeals against Order-in-Original regarding duty demands and penalty on irregular utilization of Modvat credit for manufacturing Machine Tools.

Analysis:
1. The Appellants manufactured Flexible Machining Systems (F.M.S) under Chapter 84 of the Central Excise Tariff Schedule, importing inputs for the same. They utilized countervailing duty (CVD) credit for other machine tools under Chapter 84, leading to duty demands and penalties by the Department.

2. The Department argued that the irregular utilization of Modvat credit on FMS inputs for other machine tools violated Rule 57F(4). Duty demands were confirmed under Section 11A, with penalties imposed on the Appellants.

3. The Appellants contended that they followed Departmental circulars allowing combined RG 23A Part II maintenance, and post-clearance of FMS, paid duty through PLA. They cited amendments to Modvat Rules allowing cross-utilization of credit.

4. The Appellants referenced Tribunal judgments supporting their case, emphasizing the need for restricted credit utilization for specific components. They argued that had they not used FMS credit for other tools, duty payment on FMS could have been avoided.

5. The Department relied on a precedent where credit earned on specific inputs was not permissible for other products. They supported the Commissioner's findings on duty demands.

6. The Tribunal noted that no loss of duty occurred due to the credit utilization, aligning with previous decisions on similar cases. They found no clandestine removals or contraventions of Rule 9(1), thus rejecting the demand under Rule 9(2) and the longer period under Section 11A(1) proviso.

7. Consequently, the Tribunal set aside the orders, allowing the appeals based on the absence of duty loss, lack of Rule 9(2) contraventions, and limitations on invoking longer time periods for demands.

 

 

 

 

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