1997 (8) TMI 190 - AT - Central Excise

Summary

Issues involved: Appeal against Order-in-Appeal upholding disallowance of Modvat credit u/s Rule 57C of Central Excise Rules due to full exemption eligibility u/s Notification No. 1/93.

Summary:
The appeal challenged the Order-in-Appeal that upheld the disallowance of Modvat credit taken by the appellant, amounting to Rs. 2,77,090, due to eligibility for full exemption under Notification No. 1/93, invoking Rule 57C of Central Excise Rules. The appellant argued, citing precedent, that the exemption cannot be forced upon them if not claimed, and thus, the credit should not be disallowed. The Departmental Representative, however, supported the disallowance, emphasizing the wording of Rule 57C and the exemption eligibility under the notification. The Tribunal noted that the credit was utilized for duty payment on goods eligible for exemption, thus serving the purpose of disallowance under Rule 57C. As the credit was not left unutilized for other goods, the Tribunal accepted the appellant's plea, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the Order-in-Appeal that disallowed Modvat credit under Rule 57C due to eligibility for full exemption under Notification No. 1/93. The Tribunal found that the credit was appropriately utilized for duty payment on exempted goods, thus not warranting the application of Rule 57C in this case. The appeal was allowed, and the disallowance of credit was overturned.