1993 (5) TMI 79 - Commissioner - Central Excise

Summary

Issues:
1. Demand of duty based on classification list and modvat declaration.
2. Validity of corrigendum extending the period of demand.
3. Correct calculation of duty and modvat credit.
4. Recovery of duty without show cause notice.
5. Applicability of duty rate without availing modvat credit.
6. Legal errors in demanding differential duty.

Analysis:
The appeal was filed against the demand of duty by the Assistant Collector based on the classification list and modvat declaration filed by the appellants, who are engaged in the manufacture of Aluminium wire rods. The Notification 151/86 prescribed two rates of duty, one for those not availing any credit and the other for those availing modvat. The appellants had not availed modvat credit but were issued a show cause notice for differential duty. The Collector (Appeals) observed that the appellants could not have taken modvat credit before acknowledgment and asked for rework of the demand. The Assistant Collector confirmed the demand but later issued a corrigendum extending the period of demand, which was challenged by the appellants as being issued after the appeal hearing. The Collector (Appeals) did not address this corrigendum in the order, leading to further appeals.

The Assistant Collector reworked the demand based on acknowledgment date and corrigendum, holding the duty payable for a specific period. The appellants contended that they had not availed modvat credit during certain months, questioning the demand calculation. The Collector (Appeals) remanded the matter back for re-adjudication considering the observations made. The Assistant Collector confirmed the demand for a revised amount, acknowledging the non-availment of modvat credit by the appellants during specific months. The appellants appealed against this order, arguing that they correctly paid the duty and challenging the validity of the corrigendum issued post-hearing.

The judgment highlighted the errors in demanding differential duty from the appellants despite not availing modvat credit. It emphasized that filing a declaration does not automatically entail charging the rate applicable to modvat assessees. The extension of the demand period and enhancement of the amount through a post-hearing corrigendum was deemed illegal. The judgment concluded that since the appellants did not avail modvat credit during certain months, there was no short payment of duty, rendering the demand unjustified. Consequently, the Assistant Collector's order was set aside, and the appeal was allowed, emphasizing the correct application of duty rates and modvat credit in excise matters.