2024 (8) TMI 585 - AT - Central Excise

Wrongful availment of Modvat Credit - month of August, 1997 - short payment of central excise duty. Wrongful availment of Modvat Credit - month of August, 1997 - HELD THAT - It is noted that during the month of August, 1997, the Modvat Credit was available with the appellant and has only lapsed w.e.f. 01.09.1997 when the N/N. 43/97 dt. 30.08.1997 was made applicable. Therefore, this Modavt credit has rightly been availed by the appellant. Short payment of central excise duty - HELD THAT - The Commissioner finally determined the annual capacity of production of the appellant as recorded in para 3.4.6 that the appellant were paying duty @ Rs.400/- per MT. It clearly shows that they were working under Rule 96 ZP(1) instead of 96 ZP(3) of the Rules - the demand of duty on the basis of annual capacity of production of the unit fixed by the competent authority is not sustainable in view of the fact that the order of the Commissioner dated 30.10.2003 fixing the annual capacity of production was set aside by the Tribunal in OSAKA ALLOYS STEELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., JALANDHAR 2005 (7) TMI 236 - CESTAT, NEW DELHI . The appellant have fully discharged payment of duty in accordance with Section 3A, Rule 96 ZP(1) (2) and the impugned order is not sustainable in law - Appeal allowed.

Summary

Issues:
1. Availment of Modvat Credit in August 1997
2. Short payment of central excise duty from September 1997 to March 1998

Analysis:

Issue 1: Availment of Modvat Credit in August 1997
The appellant availed Modvat Credit amounting to Rs.1,24,027.67 in August 1997. The Tribunal noted that the credit lapsed only from September 1997 when Notification No. 43/97 was made applicable. Therefore, the Tribunal found that the appellant rightfully availed the Modvat credit in August 1997.

Issue 2: Short Payment of Central Excise Duty
Regarding the second issue of short payment of central excise duty amounting to Rs.5,10,756 from September 1997 to March 1998, the Tribunal observed that the appellant was working under Rule 96 ZP(1) instead of Rule 96 ZP(3) as determined by the Commissioner in 2003. The appellant consistently filed returns under Rule 96 ZP(1) and declared their operation under the same rule from September 1997. The Tribunal found that the demand based on the fixed annual capacity of production was not sustainable as the Commissioner's order was set aside by the Tribunal in 2005, which was upheld by the High Court and Supreme Court. Therefore, the Tribunal concluded that the appellant had discharged their duty obligations under Section 3A and Rule 96 ZP(1) & (2) correctly. Consequently, the impugned order was deemed unsustainable in law, and the Tribunal allowed the appeal of the appellant with any consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and providing relief based on the detailed analysis of the issues involved in the case.