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1998 (8) TMI 312 - AT - Central Excise
Issues:
1. Denial of Modvat credit of over Rs. 59 Lacs in respect of Cut Tobacco 2. Imposition of a penalty of over Rs. 60 Lacs under adjudication Order Analysis: Issue 1: Denial of Modvat Credit The case involved a dispute regarding the denial of Modvat credit amounting to over Rs. 59 Lacs in relation to Cut Tobacco. The appellants, cigarette manufacturers, claimed entitlement to Modvat credit under Rule 57H on the quantity of input contained in the finished stock and rip tobacco. They had applied for permission to take the credit, which was eventually allowed by the jurisdictional Assistant Collector following a court order. The appellant argued that the denial of Modvat credit was against the law, as Rule 57H authorized the taking of credit on goods in stock. The appellant also contended that the denial was based on incorrect assumptions regarding double benefits and set off provisions. The Commissioner's findings were challenged as being contrary to facts and law. Issue 2: Imposition of Penalty The Commissioner had imposed a penalty of over Rs. 60 Lacs alongside the denial of Modvat credit. The appellant's representative argued that the penalty was unjustified, emphasizing that the denial of Modvat credit itself was erroneous. The appellant's position was supported by the fact that the Assistant Collector had permitted the credit, and the charge of suppression of facts was deemed baseless. The appellate tribunal acknowledged the need to reconsider the case, highlighting the differences between the present situation and the precedent cited by the adjudicating authority. Consequently, the tribunal waived the pre-deposit of duty and penalty demands, remanding the case for a fresh assessment in accordance with the law and the observations made. In conclusion, the appellate tribunal directed the adjudicating authority to review the case, allowing the appellants an opportunity to present their arguments and ensuring a correct assessment based on the observations made during the proceedings.
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