1994 (12) TMI 243 - AT - Central Excise

Summary

Issues:
1. Whether the duty demand on account of disallowance of Modvat Credit taken by the appellant is valid.
2. Whether the longer period of limitation under Rule 57-I (1) was rightly invoked due to suppression of facts.
3. Whether the reversal of Modvat Credit for the appellant was barred by limitation.
4. Whether the declaration made by the appellant constituted suppression of relevant facts.
5. Whether the questions raised by the Revenue regarding declaration of inputs and suppression of facts constitute questions of law.

Analysis:

1. The Tribunal considered two appeals filed by the appellant against orders confirming duty demand and penalties imposed by the Collector of Central Excise. The duty demand was due to the disallowance of Modvat Credit on certain items deemed ineligible for the benefit. The Tribunal held that electrodes were considered tools and barrels and wedges were equipment, thus not eligible for Modvat benefit as per the exclusion in the Explanation under 57A.

2. The appellant argued that the duty demand was barred by limitation as there was no suppression of facts since full disclosure was made to the department. The Department contended that the items were used as equipment and tools, leading to the wrong availment of Modvat credit. The Tribunal found that the notices were clearly barred by limitation in both cases, as the appellant had not suppressed the nature and use of the items with the intention to deceive the Department.

3. The Tribunal further noted that the appellant had availed Modvat credit after full disclosure of facts, and penalties were not justified. Despite the Department's clarifications on the eligibility of certain items for credit, the Tribunal held that the appellant's plea on the ground of limitation should succeed. Therefore, the Appeals were allowed on the ground of limitation, and the impugned orders were set aside.

4. The Revenue raised questions regarding the proper declaration of inputs and whether non-disclosure of the function or use of excluded inputs constituted suppression of facts. The JDR argued that non-declaration of the function or use of excluded inputs amounted to suppression, justifying the extended time limit for reversing Modvat credit. However, the Consultant for the appellant contended that the inputs were eligible and not excluded under Rule 57A, based on their nature, use, and function.

5. The Tribunal rejected the Reference Application by the Revenue, stating that the questions raised did not constitute questions of law. It was emphasized that the determination of whether an input falls under an excluded category is a matter of fact and evidence, not a legal question. Therefore, the Tribunal held that no question of law arose from its order, and the Reference Application was rejected.