2004 (2) TMI 228 - AT - Central Excise

Summary

Issues:
1. Dispute regarding the lapse of Modvat credit on inputs and finished goods as per notifications.
2. Challenge to the orders of the Deputy Commissioner by the Revenue.
3. Interpretation of notifications and rules regarding the reversal of credit availed on inputs and finished goods.
4. Applicability of the decision of the Larger Bench in a similar case.
5. Revenue's contention on irregular availment of credit and the effect of de-notification on already availed credit.

Analysis:
1. The appeals filed by the Revenue concern the rejection of revision applications by the Commissioner of Central Excise, Patna, related to the lapse of Modvat credit on inputs and finished goods due to notifications issued on 1-8-97. The Deputy Commissioner initially dropped the proceedings against the respondents, leading to the Revenue challenging these orders before the Commissioner (Appeals).

2. The Commissioner (Appeals) upheld the decision of the Deputy Commissioner, citing the provisions of Notfn No. 27/97-CX and the absence of specific rules for the reversal of credit availed on inputs and finished goods as on 1-8-97. The Revenue's grounds of appeal did not contest the applicability of a Larger Bench decision, focusing instead on the irregular availment of credit due to subsequent de-notification of the final product.

3. The Commissioner (Appeals) referenced the Larger Bench decision in CCE v. M/s. Ashoka Iron & Steel Fabricators, emphasizing that the credit on inputs and finished goods need not be reversed when the final goods are not exempted but de-notified from availing Modvat credit. The Revenue's argument that the credit availed on inputs for non-notified final products should be considered irregular was dismissed, as the legislation did not provide for the recovery of already utilized credit post-de-notification.

4. The Tribunal concurred with the Commissioner (Appeals) and rejected the Revenue's appeal, highlighting that the decision of the Larger Bench in a similar context applied to the present case. The Tribunal emphasized that the de-notification of final products from Modvat credit provisions did not render the previously availed credit irregular, and the lapse of un-utilized credit was the only consequence mentioned in the notifications.

5. Ultimately, the Tribunal found no grounds for interference in the orders of the Commissioner (Appeals) and upheld the decision that the Revenue's appeal lacked merit. The judgment focused on the legal interpretation of notifications and rules governing the lapse of Modvat credit, emphasizing the absence of provisions for reversing credit on inputs and finished goods post-de-notification.