2004 (5) TMI 202 - AT - Central Excise

Summary

Issues involved: Appeal against order of Commissioner upholding demand under Rule 57-I and Sections 11A, 11AC, and 11AA of Central Excise Act for alleged wrong availment of Modvat credit during April 1992 - March 1993.

Analysis:

1. The appellant, a manufacturer of varnishes and thinners, opted out of the Modvat scheme to avail SSI exemption under Notification 1/93-C.E. The appellant reversed credit amount of Rs. 10,509/- on 31-3-1993.

2. Allegations included additional stock of inputs not declared during reversal of credit, duty paying documents received without goods, improper credit entries in registers, and wrong availment of credit on inputs used in duty-exempt products.

3. The appellant contested various demands and penalties. The advocate agreed to the denial of credit of Rs. 14,961/- but contested other demands. The department alleged credit availed without evidence, non-receipt of goods, and improper credit entries.

4. The advocate argued that inputs not received under gate passes were not modvatable, and reversal of credit was unnecessary. Entries not made in private records did not prove non-receipt of goods under duty paying documents.

5. The advocate cited relevant case laws to support contentions against demands related to improper credit entries in registers and credit taken before receipt of subsidiary certificates.

6. The advocate successfully argued against the mandatory penalty imposed under Rule 57-I, citing the timing of the irregularity and penalty introduction.

7. The appeal was partly allowed, setting aside the penalty under Rule 57-I and confirming the demand for credit of Rs. 14,961/- while setting aside the rest of the demands. Interest was to be paid as per the law on the confirmed amount.

8. The judgment concluded by partially allowing the appeal and addressing each issue raised, ultimately setting aside certain demands and penalties while confirming others, in line with the arguments presented by the appellant's advocate.