2004 (6) TMI 211 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit in respect of HSD oil.
2. Demand of interest on the credit amount payable.

Analysis:
1. The appeal was filed against the disallowance of Modvat credit on HSD oil. The appellant, a cement manufacturer, had availed Modvat credit on duty paid for HSD oil used in electricity generation. The Inspector Central Excise advised them to reverse the credit, leading to a legal battle. The High Court stayed the circular disallowing the credit. The Department issued show cause notices for wrong credit availment. Parliament validated credit recovery from 1995 to 2000. The appellant challenged the interest demand, arguing timely payment within the limitation period. The Tribunal upheld the disallowance of Modvat credit but rejected the interest challenge.

2. The Department argued that the Finance Act, 2000 allowed credit recovery within 30 days of assent, with interest for delays. The Tribunal cited a case where interest accrued for delayed payments. The Tribunal upheld the interest demand, emphasizing the legal obligation to repay credits promptly. The appellant's failure to repay within 30 days attracted interest. The Tribunal differentiated between single-member and division bench decisions, supporting the interest demand based on the Act's provisions. The Tribunal rejected the appellant's argument that interest should only apply post-assessment, emphasizing the Act's clear mandate on timely credit repayment.

In conclusion, the Tribunal upheld the disallowance of Modvat credit on HSD oil and the demand for interest on delayed credit repayment, citing the specific provisions of the Finance Act, 2000. The appellant's failure to repay the credit within the stipulated period led to the rightfully confirmed interest demand. The Tribunal's decision aligned with legal obligations and legislative mandates, dismissing the appeal.