1995 (5) TMI 154 - AT - Central Excise

Summary

Issues:
Appeal against denial of re-credit of Modvat credit, interpretation of Rule 57E, eligibility for Modvat credit on inputs and finished products, restoration of Modvat credit, limitation period for claiming credit.

Analysis:
The appeal challenges the denial of re-credit of Modvat credit by the Collector of Central Excise, Trichy, due to the clearance of finished products without duty payment. The appellants had initially taken Modvat credit on Aluminium Ingots for manufacturing Aluminium Castings, which were cleared without duty payment. Subsequently, duty was demanded and paid for these castings. The dispute revolves around the restoration of Modvat credit expunged earlier. The Collector (Appeals) rejected the plea citing the absence of a legal provision for such restoration.

The appellant argues that Rule 57E allows for credit variation if duty rates change, supporting their claim for credit restoration. The Department contends that Rule 57E applies only to duty rate variations post-input receipt, not the scenario at hand. The Tribunal notes that the appellant's eligibility for Modvat credit on Aluminium Ingots is undisputed. The authorities re-assessed the castings under dutiable categories, leading to duty payment. The appellant seeks re-credit based on the duty payment for the castings.

The Tribunal finds no legal hindrance to the appellant's eligibility for Modvat credit on the castings. The absence of a specific provision for credit restoration post-duty imposition does not negate their entitlement. The Tribunal emphasizes that once duty is charged on previously duty-free goods, the appellant regains Modvat credit eligibility. Referring to a Supreme Court ruling, a 6-month limitation period for claiming credit restoration is deemed reasonable. Citing a case precedent, the Tribunal allows the appeal, granting the appellants the requested Modvat credit restoration subject to the specified limitation period.