1988 (6) TMI 206 - AT - Central Excise

Summary

Issues:
1. Denial of MODVAT credit on Aluminium rods used as raw material.
2. Simultaneous availing of proforma credit under Rule 56A and MODVAT benefit under Rule 57A.
3. Availing of notional credit under Rule 57B for intermediate products.

Analysis:
1. The appeal challenged the denial of MODVAT credit on Aluminium rods used as raw material. The appellant manufactured specific products falling under Central Excise Tariff and had availed proforma credit under Rule 56A before opting for the MODVAT Scheme. The Department objected to the appellant's procedures and found discrepancies in duty payments and credit availed. The Collector (Appeals) upheld the denial of MODVAT credit but modified the penalty imposed.

2. The appellant argued that the exemption benefit for intermediate products must be specifically claimed, and they were eligible to take credit at a normal rate under Rule 57B. They contended that a harmonious construction of sub-rules (8) and (9) of Rule 56A allowed simultaneous availing of proforma credit and MODVAT benefit. However, the Department emphasized that manufacturers must choose between available facilities and cannot avail of both simultaneously.

3. The Tribunal analyzed Rule 56A in its entirety and highlighted the amendments that allowed manufacturers availing of MODVAT to also avail of proforma credit for inputs not covered under MODVAT. The Tribunal referenced Notification 117/87, which clarified the eligibility for simultaneous availing of these facilities. The Tribunal also addressed the appellant's argument regarding notional credit under Rule 57B, emphasizing that the appellant's choice to pay duty on intermediate goods affected their eligibility for notional credit.

4. Ultimately, the Tribunal upheld the lower authorities' decision to bar the appellant from enjoying both facilities simultaneously until 15.4.1987. The Tribunal rejected the appellant's argument for availing notional credit under Rule 57B and remanded the case for re-determining eligibility for simultaneous availment of MODVAT and proforma credit post the specified date. The appeal was disposed of based on these findings.