1994 (2) TMI 176 - AT - Central Excise

Summary

Issues:
Appeal against order of Collector (Appeals) regarding duty payment and account maintenance under Modvat Scheme.

Detailed Analysis:

1. The appellants were engaged in the manufacture of Detergent Intermediate Product and Wheel Detergent Powder. Both inputs and outputs were declared and covered by the Modvat Scheme, with proper accounts maintained.

2. The appellants received inputs in the account of Detergent Intermediate and cleared them after obtaining necessary permission under Rule 57F(1)(2). They debited duty from the account of Wheel Detergent Powder due to a nil balance in the Detergent Intermediate account, which was disputed by the Asstt. Collector.

3. The appellants argued that the duty-paid inputs were common for both products, and maintaining separate accounts was for internal convenience only. They contended that the revenue was not affected as duty liability was discharged, except for a deposited sum of Rs. 6410.25.

4. The Joint CDR argued that even though inputs were common, separate accounts were maintained, and debiting duty from the wrong account was a mis-utilization of credit accrued on Wheel Detergent Powder.

5. The Tribunal observed that while the appellants should have cleared inputs from the proper account, the net revenue effect was nil as final products were cleared by paying duty from the credit taken on duty-paid inputs.

6. The Tribunal acknowledged a procedural error but emphasized that for minor infractions, substantive benefits should not be denied. The order was upheld for Rs. 6410.25, which was already paid, but set aside for the rest of the amount due to the Department's failure to establish any further sum owed after necessary adjustments.

7. In conclusion, the appeal was accepted based on the understanding that the net revenue effect was nil, and the procedural error did not justify issuing a demand beyond the already paid amount. The Tribunal emphasized the importance of rectifying procedural errors without denying substantive benefits rightfully due.