1992 (5) TMI 131 - AT - Central Excise

Summary

Issues:
The appeal involves the reversal of modvat credit and imposition of penalty by the Addl. Collector of Central Excise, Bombay-II.

Reversal of Modvat Credit:
The appellants, manufacturers of oxygen/Acetylene gases, received calcium carbide as an input in metal containers and took modvat credit of the duty on this input as per the gate passes. The Department alleged that empty containers of calcium carbide, disposed of as scrap or old containers, led to duty being worked out on the disposal value of the containers, which was sought to be reversed from the modvat credit. The Addl. Collector passed the impugned order based on this, leading to the appeal. However, the Tribunal found that the duty on calcium carbide, including packing charges, was paid and credit was taken as per Rule 57G of the Central Excise Rules. The Addl. Collector's view that modvat credit on used packing materials needed to be reversed was disagreed with by the Tribunal, as the packing materials were part of the input value for which duty was paid and credit taken.

Imposition of Penalty:
In addition to the reversal of modvat credit, a penalty of Rs. 14,000/- was imposed on the appellants by the Addl. Collector. However, since the Tribunal allowed the appeal and set aside the order of the Addl. Collector regarding the reversal of modvat credit, it can be inferred that the penalty imposed would also be set aside.

This judgment highlights the importance of adhering to the provisions of the Central Excise Rules, specifically Rule 57G, in claiming modvat credit and the treatment of packing materials as part of the input value for which duty is paid.