1992 (12) TMI 120 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit and waiver of predeposit of duty.
2. Calculation of Modvat credit disallowed and time-barred notice.
3. Adjustment of credit under Rule 57-I and financial hardship assessment.
4. Dispute on the quantity of inputs and final product clearance.
5. Application of Section 11A and time limitation for notice issuance.

Analysis:

The judgment by the Appellate Tribunal CEGAT, CALCUTTA involved the disallowance of Modvat credit and the waiver of predeposit of duty demanded by the Collector of Central Excise, Calcutta-1 Collectorate. The case pertained to the removal of Iron and Steel Scrap by dismantling an imported ship, where the credit of duty was deemed exhausted by the Collector. The petitioners sought waiver of predeposit, arguing that the calculation of Modvat credit disallowed was incorrect due to the quantity cleared during the exempted period, leading to inadequate balance for subsequent clearances. The petitioners also contested the time-barred notice issued by an incompetent officer and claimed financial hardship due to the demanded amount exceeding their capacity.

Regarding the adjustment of credit under Rule 57-I, the Departmental Representative supported the order, stating that the notice was timely issued and the applicants were a profit-making firm with good turnover, thus disputing the financial hardship claim. The Tribunal examined the arguments and record, noting that the notice sought to disallow Modvat credit and recover a specific amount under Rule 57-I. The dispute arose from the calculation of credit disallowance based on the quantity of inputs used, with the petitioners contending that only the quantity cleared should be considered, not the notional input quantity determined by the Department.

On the application of Section 11A and time limitation for notice issuance, the Tribunal clarified that Section 11A did not apply in this case as it concerned the adjustment of credit under Rule 57-I, not recovery of duty not levied or short levied. The Tribunal upheld the Department's stance on the disallowance of credit based on inputs used, rejecting the plea for waiver of predeposit. The Tribunal also analyzed the financial position of the petitioners, directing them to deposit the duty demanded due to their substantial sales turnover and available cash and debts, setting a compliance deadline and scheduling the appeal for disposal.

In conclusion, the judgment addressed the issues of Modvat credit disallowance, time-barred notice, adjustment of credit under Rule 57-I, dispute on input quantities, application of Section 11A, and financial hardship assessment, ultimately ruling against the waiver of predeposit and instructing the petitioners to comply with the duty payment deadline.