1999 (1) TMI 101 - AT - Central Excise

Summary

Issues:
1. Incorrect availing of Modvat credit under Notification 75/87.
2. Appeal against the order confirming the demand by the Asstt. Collector.
3. Applicability of Modvat credit and duty payment under the notification.
4. Entitlement to Modvat credit for duty paid inputs used in final product manufacture.
5. Interpretation of Notification 75/87 regarding exemption and Modvat credit availment.
6. Decision on appeal based on grounds presented by the appellant.

Issue 1: Incorrect availing of Modvat credit under Notification 75/87
The appellant, a manufacturer of excisable goods, claimed exemption under Notification 75/87 but was served show cause notices for incorrectly availing Modvat credit. The Asstt. Collector confirmed the demand, partially allowing the appeal by the Collector (Appeals) who modified the order, setting aside the credit taken on inputs used in the final product manufacture. The appellant appealed against this decision.

Issue 2: Appeal against the order confirming the demand by the Asstt. Collector
The appeal challenged the quantification of demand, arguing that duty was paid under the notification and Modvat credit should be allowed. The appellant contended that the duty was already paid, and if not upheld, adjustments should be made. The Respondent argued that Modvat credit was not permissible under the notification for the first Rs. 5 lakhs of clearance.

Issue 3: Applicability of Modvat credit and duty payment under the notification
The Tribunal considered whether the appellant was entitled to Modvat credit for duty paid inputs used in the final product manufacture under Notification 75/87. The Tribunal referred to relevant case laws and trade notices to determine the admissibility of Modvat credit in such cases.

Issue 4: Entitlement to Modvat credit for duty paid inputs used in final product manufacture
The Tribunal analyzed the appellant's claim for Modvat credit on inputs used in final product manufacture. It was observed that the appellant, being a Small Scale Industry (SSI) unit, availed total exemption up to Rs. 5 lakhs under the notification, making Modvat credit inadmissible for duty paid within this limit.

Issue 5: Interpretation of Notification 75/87 regarding exemption and Modvat credit availment
The Tribunal interpreted Notification 75/87 to clarify that when duty is exempted under the notification, Modvat credit cannot be availed. The appellant's voluntary payment of duty within the exemption limit did not entitle them to claim Modvat credit, as per the notification's provisions.

Issue 6: Decision on appeal based on grounds presented by the appellant
After considering the arguments presented by both parties, the Tribunal found that the appellant's contentions regarding Modvat credit entitlement were not sufficient to overturn the Collector (Appeals)'s decision. The Tribunal upheld the rejection of the appeal based on the provisions of Notification 75/87 and the appellant's obligation to abide by its conditions.

In conclusion, the Tribunal rejected the appeal, emphasizing that the appellant's payment of duty within the exemption limit did not entitle them to claim Modvat credit under Notification 75/87. The decision was based on the clear provisions of the notification and the appellant's obligation to comply with its terms.