1998 (11) TMI 338 - AT - Central Excise

Summary

Issues:
1. Utilization of Modvat credit in the dry process unit without filing a Modvat declaration.
2. Maintenance of separate RG 23A Part I and Part II accounts for the new unit.
3. Reversal/recovery of wrongly availed credit amount.
4. Imposition of penalty on the Respondents.

Utilization of Modvat Credit without Filing Declaration:
The case involved the Respondents, who manufactured cement under Chapter 25 of CETA. They had a wet process unit and a dry process unit until July 1988 when they obtained a separate Central Excise license for the dry process unit. The issue arose when it was discovered that the input gypsum received in the old unit was utilized in the new dry process unit without filing a declaration for Modvat purposes by the new unit. The Assistant Collector initiated proceedings against the Respondents, ordering the reversal/recovery of the wrongly availed credit amount and imposing a penalty. On appeal, the Collector (Appeals) acknowledged the improper utilization of Modvat credit but allowed the credit amount to be restored in the Modvat accounts of the old wet process unit, considering that the duty demand had been paid by debiting the PLA of the dry process unit. The impugned order was upheld, and the appeal was rejected.

Maintenance of Separate RG 23A Part I and Part II Accounts:
The Collector (Appeals) noted that the utilization of Modvat credit in the manufacture in the dry process unit without filing a Modvat declaration and without maintaining separate RG 23A Part I and Part II accounts for the new unit was deemed incorrect in law. However, the Collector (Appeals) accepted the Respondents' submission that they had paid the duty involved by debiting their PLA of the dry process unit, allowing them to take credit of this amount in the RG 23A Part II for their old wet process unit. Consequently, the Collector (Appeals) directed the Assistant Collector to permit the credit of the amount in question in the RG 23A Part II account related to the wet process unit and set aside the penalty imposed on the Respondents.

Reversal/Recovery of Wrongly Availed Credit Amount and Penalty Imposition:
The Assistant Collector adjudicated the matter, ordering the reversal/recovery of the wrongly availed credit amount by the dry process unit under Rule 57-I of the Central Excise Rules and imposing a penalty on the Respondents. However, the Collector (Appeals) overturned the penalty, considering that the duty amount had been paid by debiting the PLA of the dry process unit. The impugned order upheld the restoration of the credit amount in the Modvat accounts of the old wet process unit, leading to the rejection of the appeal.

In conclusion, the judgment addressed the issues of utilizing Modvat credit without filing a declaration, maintaining separate RG 23A accounts, reversal/recovery of wrongly availed credit, and penalty imposition. The Collector (Appeals) allowed the credit amount to be restored in the old unit's Modvat accounts, considering the duty payment made by the Respondents, leading to the rejection of the appeal and upholding of the impugned order.