2001 (8) TMI 182 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit by Commissioner of Central Excise, Allahabad.
2. Clearances without payment of duty under Rule 13(1)(b) for export.
3. Legal dispute regarding availment of Modvat credit.
4. Point of time-bar for the demand.
5. Comparison with previous Tribunal decisions.
6. Availability of DEEC Scheme benefit.
7. Appellants' claim on limitation for Modvat credit.

Analysis:
1. The appeal was against the Commissioner's order denying Modvat credit of Rs. 73,07,945 and imposing a penalty under Rule 173Q and Section 11AC of the Central Excise Act, along with interest at 24%. The appellants manufactured Carbon Black, availed Modvat credit, and cleared products without duty payment under Rule 13(1)(b) for export, with permission from the Commissioner.

2. Central Excise authorities directed the reversal of Modvat credit, considering the clearances exempt from duty. The appellants argued that since the clearances were not duty exempt or nil-rated, the reversal was not legal. They cited Tribunal decisions and Supreme Court rulings supporting their stance.

3. The Tribunal analyzed previous decisions, including Orissa Synthetics Ltd. and Hindustan Petroleum Corpn. Ltd., concluding that Rule 57C did not apply to the appellants' situation. The Commissioner's reliance on Kirloskar Oil Engines Ltd. was deemed incorrect, and the appeal was decided in favor of the appellants regarding the denial of Modvat credit.

4. On the point of time-bar, the Tribunal found that the extended period of limitation was unjustified as the appellants did not engage in fraud or suppression of facts to evade duty payment. The appeal succeeded on merits and limitation, leading to the setting aside of the impugned order.

5. The issue did not pertain to DEEC Scheme benefits for exporters but focused on Modvat credit for Carbon Black manufacturers. The Tribunal refrained from commenting on the duty drawback claimed by the appellants, as it was not the subject of the appeal.

6. The Tribunal's decision highlighted the appellants' strong case on limitation, emphasizing that the excise authorities were aware of the Modvat credit availed by the appellants and that the longer period of limitation was not justified based on the circumstances presented. The appeal was upheld on both merit and limitation grounds, resulting in the reversal of the Commissioner's order.