2000 (7) TMI 438 - AT - Central Excise

Summary

Issues:
1. Time bar for show cause notice
2. Admissibility of credit taken on unapproved inputs

Analysis:
1. Time bar for show cause notice:
The case involves a dispute regarding the time bar for issuing a show cause notice. The appellant argued that the notice issued on 14-2-1989 for the period from 29-4-1987 to 24-12-1987 was beyond the statutory time limit. The appellant contended that the demand was time-barred as discrepancies were noticed earlier, and the notice was issued after a significant delay. The Tribunal agreed with the appellant, emphasizing that the notice was issued beyond the statutory period, rendering it invalid. The Tribunal held that the demand for recovery was beyond the permissible time limit, thereby ruling in favor of the appellant on this issue.

2. Admissibility of credit taken on unapproved inputs:
The second issue revolved around the admissibility of the credit taken by the appellant on inputs not approved by the department. The appellant had availed Modvat credit on certain inputs, which were later disputed by the department. The Tribunal examined the declarations filed by the appellant and the correspondence between the parties regarding the disputed inputs. It was observed that the appellant had not agreed with the Superintendent's demand to debit the credits taken on certain inputs. The Tribunal analyzed the classification of the inputs and the chapter headings under which they fell. It was noted that the inputs, despite variations in description, were covered under the same chapter heading. Relying on relevant trade notices and circulars, the Tribunal concluded that the appellant was entitled to avail Modvat credit on the disputed inputs. The Tribunal found in favor of the appellant on this issue as well.

In conclusion, the Tribunal held that the show cause notice was time-barred and that the appellant was entitled to avail Modvat credit on the disputed inputs. Therefore, the Impugned order was set aside, and the appeal was allowed with consequential relief according to law.