1999 (6) TMI 159 - AT - Central Excise

Summary

Issues:
1. Availment of Modvat credit on input bulk drugs under Notification 31/88.
2. Reversal of Modvat credit amounting to Rs. 44,389.74.
3. Show cause notice issued under Section 11A of the Central Excise Act and Rule 57(1) of the Central Excise Rules.
4. Discrepancy in duty payment between supplier and respondent.
5. Applicability of Trade Notice No. 12/91.
6. Proper assessment of duty and Modvat credit.

Analysis:

Issue 1: Availment of Modvat credit under Notification 31/88
The case revolves around the respondents availing Modvat credit on input bulk drugs under Notification 31/88. The department contended that the Modvat credit of Rs. 44,389.74 should be reversed due to discrepancies in duty payment declarations.

Issue 2: Reversal of Modvat credit
The department issued show cause notices to the respondent for wrongly availing Modvat credit. The Assistant Collector confirmed a demand of Rs. 59,178.11 but allowed Modvat credit amounting to Rs. 5,576/-. The respondent appealed against this decision, leading to the current appeal.

Issue 3: Show cause notice under Central Excise Act and Rules
Show cause notices were issued under Section 11A of the Central Excise Act and Rule 57(1) of the Central Excise Rules, alleging improper availing of Modvat credit by the respondent.

Issue 4: Discrepancy in duty payment
The department argued that the supplier paid 15% duty instead of the correct 5% duty under Notification 31/88, leading to an excess payment that should not qualify for Modvat credit. The respondent defended the availed credit based on the duty paying documents of the supplier.

Issue 5: Applicability of Trade Notice No. 12/91
The department cited Trade Notice No. 12/91, emphasizing that duty payment should align with the specified rates under Notification 31/88 to qualify for Modvat credit.

Issue 6: Proper assessment of duty and Modvat credit
The judgment analyzed various legal precedents and rules to determine the proper assessment of duty and eligibility for Modvat credit. It considered the duty paying documents, classification lists, and RT 12 returns of the supplier to uphold the respondent's availed Modvat credit.

In conclusion, the appeal was rejected based on the reasoning that the Modvat credit availed by the respondent was proper and in accordance with the duty paying documents and relevant regulations. The judgment emphasized the importance of accurate duty payment declarations and upheld the respondent's position in this case.