1997 (9) TMI 321 - AT - Central Excise

Summary

Issues:
1. Improper availing of deemed Modvat credit on aluminium alloy ingots.
2. Show cause notices for recovery of wrongfully availed credit.
3. Interpretation of Notification No. 180/88 for exemption.
4. Enquiry into the eligibility of deemed credit from different suppliers.
5. Overlapping amounts in show cause notices.
6. Invocation of longer period under Rule 57-I.
7. Penalty under Rule 173Q of Central Excise Rules, 1944.

Analysis:
The appellants were manufacturing aluminium die cast articles using aluminium alloy ingots and had filed a declaration for Modvat credit. The Department alleged that the appellants wrongly availed deemed Modvat credit as the ingots received from suppliers were exempted under Notification No. 180/88, indicating non-duty paid status. Three show cause notices were issued for recovery, covering different periods and amounts. The Collector confirmed the demand, leading to the present appeal.

The Tribunal considered the appellants' submissions and a precedent case, emphasizing that mere existence of an exemption notification does not automatically establish non-duty paid status. In conditional exemptions, the Revenue must verify if conditions are met to conclude non-duty paid status. In this case, the appellants sourced ingots from two suppliers, with one supplier meeting exemption conditions, while the other required further investigation by the Commissioner.

Regarding computation of demand, the appellants highlighted overlapping amounts in show cause notices, leading to a directive for suitable reduction. The Tribunal agreed with the appellants' argument and directed adjustments in the demand calculation. Additionally, the Tribunal ruled out the invocation of the longer period under Rule 57-I due to a difference of opinion, leading to no penalty imposition.

The appeal was disposed of, confirming the denial of deemed credit on ingots from one supplier due to non-duty paid status. The Department was instructed to conduct inquiries into the eligibility of deemed credit from the other supplier. Recalculation of duty demand was ordered to rectify the double inclusion of deemed credit, restricting the demand to the normal six-month period under Rule 57-I.