1999 (11) TMI 257 - AT - Central Excise

Summary

Issues:
Appeal against denial of Modvat credit and imposition of penalty.

Analysis:
1. The appeal was filed against the order denying Modvat credit of Rs. 2,24,589 and imposing a penalty of Rs. 10,000 by the Commissioner of Central Excise (Appeals).

2. The appellants, manufacturers of Wrist Watches, availed Modvat credit on duty paid inputs, including Polystyrene sent to job workers for manufacturing Polystyrene Boxes. The Asst. Commissioner disallowed the credit due to delays in receiving intermediate products beyond sixty days.

3. The Asst. Commissioner's decision was upheld by the Commissioner (Appeals), leading to the present appeal.

4. The appellant's counsel argued that the appellants operated under Rule 57J, which overrides other rules like Rule 57F(4). They contended that non-receipt within sixty days was a technical lapse, not justifying denial of Modvat credit, citing relevant case laws.

5. The JDR argued that the appellants took credit even when goods were dispatched later by job workers, but the date discrepancy was due to a mistake by the job worker.

6. The judge noted the non obstante clause in Rule 57J, giving it overriding effect over other rules. Relying on precedents, the judge held that the appellants' compliance with Rule 57J negated the need to adhere strictly to Rule 57F(4), setting aside the denial of Modvat credit.

7. The judge further ruled that no penalty was imposable on the appellants based on the Tribunal decision in a similar case.

8. Consequently, the appeal was accepted, the impugned order set aside, and the appellants entitled to consequential benefits under the law.