1996 (9) TMI 416 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on certain goods as adhesive.
2. Demand of duty for which a credit was wrongly taken on goods received for repairs.

Analysis:

Issue 1: Denial of Modvat credit on certain goods as adhesive
The appellants contested the denial of Modvat credit on Vimsol adhesive, alleging that the declaration filed covered all types of adhesives, including Vimsol. The appellants argued that Vimsol was known as an adhesive in the market and cited the common parlance test from the case of Atul Glass Industries Limited. However, the department contended that Vimsol was classified under sub-heading 3905.10, different from the sub-heading 35.05 mentioned in the declaration. The Tribunal held that the specific name and classification of Vimsol were not accurately declared, rendering Modvat credit inadmissible under Rule 57G. Yet, the Tribunal allowed credit on goods covered by an invoice within six months, as per the proviso to Rule 57G(5).

Issue 2: Demand of duty for wrongly taken credit on goods received for repairs
Regarding the demand of duty for wrongly taken credit on goods received for repairs, the appellants argued that they had paid duty on the repaired goods upon clearance, debiting the amount in PLA. The department insisted on reversing the credit taken in RG 23A Part II, contending that no credit could be taken on goods received for repairs. The Tribunal noted the irregularity in taking the credit but observed that duty was paid upon clearance of the repaired goods. Consequently, the Tribunal ruled against disallowing the credit or recovering the amount from the appellants, as it would result in double payment of duty.

In conclusion, the Tribunal modified the impugned order, allowing Modvat credit on goods covered by a specific invoice within the stipulated period and rejecting the denial of natural justice claim. The Tribunal also dismissed the demand for reversing the credit on goods received for repairs, as duty had already been paid upon clearance. Any consequential relief was directed to be granted to the appellants in accordance with the law.