1997 (4) TMI 167 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57E regarding variation of credit allowed by adjustment in RG 23.
2. Whether the issuance of debit notes by the appellants affects the quantum of duty and the entitlement to take credit of duty.
3. Application of Rule 57A in determining the entitlement to Modvat credit.
4. Impact of duty debit notes on the assessable value and duty credit.
5. Consistency of decision in similar cases before the Tribunal.

Analysis:

The judgment before the Appellate Tribunal CEGAT, New Delhi involved the interpretation of Rule 57E concerning the variation of credit allowed by adjustment in RG 23. The Ld. Commissioner of Central Excise challenged the order of the Ld. Collector (Appeals) which allowed the credit and set aside the penalty. The Ld. Collector (Appeals) based his decision on the provision that credit should be varied by adjustment in RG 23 if duty paid on inputs is varied, leading to a refund to the manufacturer or importer. The Ld. Collector set aside the order disallowing credit and the penalty imposed.

The case revolved around the issuance of debit notes by the appellants, who were engaged in manufacturing insulated wires and cables using PVC compound. The Department contended that issuing debit notes would reduce the assessable value and, consequently, the duty quantum. However, the appellants argued that they paid higher duty based on duty paying documents and took credit accordingly. The Ld. Collector (Appeals) ruled in favor of the respondents, stating that no variation in credit could occur unless a refund was claimed by the manufacturer of the inputs and sanctioned by the Central Excise authorities.

During the appeal, the Ld. JDR argued that issuing debit notes decreases the assessable value, leading to a reduction in duty, thereby suggesting that the credit on the decreased assessable value should not be allowed. On the other hand, the Ld. counsel for the respondents referred to a previous Tribunal decision involving the same assessee, where it was held that the credit taken should not be disturbed unless a refund is sanctioned to the manufacturer, as per Rule 57A.

The Tribunal, after considering the submissions, found the facts of the case identical to the previous decision and upheld the Ld. Collector (Appeals) ruling. It was concluded that since no duty debit notes were issued on final products affecting the duty paid by the manufacturer of the inputs, there was no variation in the Modvat credit taken. The decision was based on the provisions of Rule 57E and the consistent application of Rule 57A in determining the entitlement to Modvat credit. Consequently, the appeal was rejected, affirming the decision of the Ld. Collector (Appeals) in favor of the respondents.