1996 (9) TMI 266 - AT - Central Excise

Summary

Issues:
1. Utilization of modvat credit on capital goods for duty payable on products other than acetic acid.
2. Disallowance of credit based on objection raised.
3. Interpretation of Rule 57S of the Central Excise Rules.
4. Conflict in prima facie views between different interim orders.
5. Restoration of credit upon depositing duty amount.

Analysis:
1. The judgment addressed the issue of whether modvat credit on capital goods meant for the production of acetic acid could be utilized for duty payable on products other than acetic acid. The dispute arose when the credit was utilized for duty on other products upon receiving the capital goods for acetic acid production, leading to disallowance of the credit. The appellant argued that since the acetic acid plant was subsequently commissioned and acetic acid was cleared on payment of duty, the credit should not be extinguished as no exempted product was cleared.

2. The Tribunal considered conflicting prima facie views from different interim orders but emphasized the importance of maintaining consistency with previous decisions. Despite the conflicting views, the Tribunal allowed the appellant's request to deposit the entire duty amount and directed that they were entitled to take corresponding credit in their modvat capital goods account. This credit could then be utilized for paying duty towards acetic acid, resolving the issue of credit disallowance.

3. The interpretation of Rule 57S of the Central Excise Rules was crucial in this judgment. The Tribunal highlighted the need to read the rules in a composite manner and considered the applicability of the rule in allowing the modvat credit for duty on any excisable goods. The Tribunal's decision to restore the credit upon depositing the duty amount was based on a comprehensive understanding of the rule and its implications for the appellant's case.

4. The judgment acknowledged the conflicting prima facie views but ultimately relied on the final decisions of the Tribunal and the East Regional Bench to resolve the issue at hand. By allowing the appellant to restore the credit upon depositing the duty amount, the Tribunal aimed to provide a fair and consistent resolution despite the initial differences in views expressed in the interim orders.

5. Finally, the Tribunal directed that both appeals covered by the interim orders be listed for final hearing in October/November 1996, indicating a timeline for the resolution of the remaining issues in the case. This decision ensured that the parties involved would have an opportunity for a final hearing and resolution of all pending matters related to the appeals.