1993 (7) TMI 208 - AT - Central Excise

Summary

Issues:
1. Availment of credit of excise duty on inputs within the exemption limit.
2. Entitlement to avail Modvat credit without filing a fresh declaration after crossing the exemption limit.

Analysis:

Issue 1: Availment of credit within the exemption limit
The Collector (Appeals) determined that the appellants were not entitled to claim credit of excise duty on inputs while within the exemption limit of Rs. 20 lakhs under Notification No. 175/86-C.E., dated 1-3-1986. The Collector emphasized that credit of excise duty could only be taken if the inputs were used in the manufacture of final products not exempt from duty. Additionally, it was noted that the declaration filed by the appellants ceased to be valid when they opted for duty exemption on their final product. Consequently, the Collector upheld the Asstt. Collector's decision, disallowing the credit.

Issue 2: Entitlement to Modvat credit without a fresh declaration
The appellants argued that they did not avail credit during the period when their finished products were under the exemption limit, stating that the entries in the RG 23 were for accounting purposes only. They contended that when they started availing Modvat credit, they reversed the duty paid on inputs used in the finished products cleared under the exemption. The appellants maintained that they did not avail any credit during the period in question. They also highlighted that they had filed a declaration for the year 1990-91, referencing the earlier declaration, with clarifications provided to the department. The appellants relied on past practices and cited a Tribunal judgment to support their position.

Judgment
After considering the arguments from both sides, the Tribunal found that the appellants had made a declaration in their classification list indicating their intention to avail Modvat credit once they exceeded the exemption limit. The Tribunal noted that the appellants had filed an intimation as well. It was established that the appellants' classification list clearly outlined their plan to utilize the Modvat Scheme after exhausting the exemption limit. The Tribunal accepted the appellants' explanation regarding the accounting entries in RG 23A Part II, acknowledging that it was for record-keeping purposes and no actual credit was availed during the period in question. The Tribunal concluded that the appellants' actions were in line with the requirements, and no further intimation was necessary. Consequently, the appeal was allowed, and the lower authorities' orders were set aside, with the possibility of providing consequential relief to the appellants as per the law.

This detailed analysis of the judgment addresses the issues of credit availment within the exemption limit and entitlement to Modvat credit without a fresh declaration, highlighting the arguments presented by both parties and the Tribunal's decision based on the facts and legal provisions involved.