1998 (5) TMI 167 - AT - Central Excise

Summary

Issues:
1. Whether Regulators are considered as inputs for electric fans.
2. Applicability of the limitation period for duty demand.

Analysis:
1. The appellants, engaged in manufacturing electric fans, availed benefits under Notification No. 175/86-C.E. by purchasing Regulators from small-scale manufacturers. The Department raised a duty demand on Regulators cleared with fans, alleging they were not inputs. The Commissioner held Regulators not eligible for Modvat credit as they were not used in or in relation to electric fans. However, the Tribunal in a similar case held Regulators as indispensable for fans, making them eligible for Modvat credit. The appellants' claim for higher notional credit was justified as per Rule 57B.

2. The Commissioner applied a general three-year limitation period for the duty demand. The appellants argued that the demand was time-barred, citing a case where a six-month limitation was upheld. The Tribunal agreed, holding the demand beyond six months as barred by limitation. The judgment favored the appellants on both merit and limitation grounds, allowing the appeal.