1997 (8) TMI 210 - AT - Central Excise

Summary

Issues: Determination of whether deemed Modvat credit can be availed by a unit enjoying exemption under Notification No. 1/93 after crossing the aggregate value limit of Rs. 75 lakh.

The judgment involves six appeals concerning the availing of deemed Modvat credit by re-rolling mills after exceeding the Rs. 75 lakh limit. The appellants, re-rolling mills without a furnace, claimed the benefit of deemed Modvat credit for iron and steel materials purchased post-April 1, 1994, despite crossing the exemption limit. The Department contended that they were no longer a Small Scale Unit and ineligible for the benefit. The appellants relied on Tribunal decisions in similar cases to support their claim.

The appellants argued that previous Tribunal decisions supported their entitlement to deemed Modvat credit even after surpassing the Rs. 75 lakh limit. They cited cases like Collector of Central Excise v. Venketshwara Steel Industries and Durga Ispat (P) Ltd. v. CCE, Meerut to strengthen their position. Additionally, in one appeal, they contested the denial of Modvat credit due to a technicality regarding the nature of the invoice issued by Bharat Petroleum.

The respondent Commissioner reiterated the lower authorities' findings on the inadmissibility of deemed Modvat credit post-exemption limit and the denial of specific Modvat credit due to insufficient documentation. The respondent argued against overturning the penalties imposed on the appellants.

The Tribunal examined the issue and upheld the appellants' right to deemed Modvat credit even after exceeding the Rs. 75 lakh limit, citing precedents set by previous Tribunal decisions. However, regarding the specific Modvat credit denial related to a cash memo from Bharat Petroleum, the Tribunal found the document lacking essential details required for Modvat credit under the Central Excise Rules.

Consequently, the Tribunal set aside the penalties imposed on the appellants for two appeals, given their entitlement to deemed Modvat credit beyond the exemption limit. The judgment disposed of all six appeals accordingly, with the appellants eligible for any consequential relief as per the law.