1990 (12) TMI 237 - AT - Central Excise

Summary

Issues:
1. Interpretation of MODVAT credit scheme.
2. Validity of deemed MODVAT credit.
3. Reversal of MODVAT credit.
4. Impact of amending instructions on MODVAT scheme.

Analysis:
1. The case involves the interpretation of the MODVAT credit scheme concerning the eligibility and utilization of credit for specified inputs. The respondents availed MODVAT credit based on government instructions but faced issues when the instructions were modified, affecting the eligibility criteria for deemed MODVAT credit. The dispute revolves around the application of Rule 57G(2) and the proviso allowing for deemed duty paid status for certain inputs.

2. The validity of the deemed MODVAT credit availed by the respondents is questioned by the Revenue following the issuance of amending instructions on 2-11-1987. The Collector of Central Excise (Appeals) initially allowed the appeal filed by the respondents, stating that the unutilized inputs purchased before the amendment date should not reverse the deemed credit. The Revenue contested this decision, arguing that the stock of inputs was no longer covered by the deemed MODVAT credit scheme post-amendment.

3. The issue of reversal of MODVAT credit arises as the Revenue challenges the Collector's decision, emphasizing that the instructions issued post-amendment impacted the eligibility of the inputs for deemed MODVAT credit. The respondents did not appear during the proceedings, leading to a focus on the legal implications of the amendment on the previously availed credit.

4. The impact of amending instructions on the MODVAT scheme is crucial in this case. The Tribunal analyzed the situation, emphasizing that once the inputs were deemed duty paid and credited under the MODVAT scheme, their character could not be altered retroactively by subsequent amendments. The Tribunal highlighted the procedural requirements for utilizing MODVAT credit and the restrictions on removing credited inputs without proper authorization.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Collector's decision that the MODVAT credit availed by the respondents for inputs purchased before the amendment date could not be reversed. The judgment underscores the significance of adherence to MODVAT rules and the limitations on altering the credited status of inputs post-utilization based on subsequent regulatory changes.