1996 (10) TMI 340 - AT - Central Excise

Summary

Issues:
1. Recovery of wrongly utilized Modvat credit under Rule 57-I of Central Excise Rules.
2. Validity of certificates issued by Hindustan Zinc Ltd. as duty-paying documents.
3. Application of limitation period under Rule 57-I for credit taken before August 1989.
4. Acceptance of certificates issued by Public Sector Undertakings as duty paying documents.

Analysis:

1. The case involved the appellants, engaged in manufacturing dry cell batteries, torches, etc., who utilized Modvat credit for duty paid on inputs. The dispute arose when a show cause notice was issued for recovery of Rs. 1,33,769.54 wrongly utilized as Modvat credit under Rule 57-I of the Central Excise Rules. The Assistant Collector confirmed a duty demand of Rs. 1,30,368, which was upheld by the Collector (Appeals), leading to the present appeal.

2. The appellants argued that certificates from Hindustan Zinc Ltd. were valid duty-paying documents, supported by past Tribunal orders. They contended that the certificates mentioned both basic and special excise duty, justifying their claim for special excise duty credit. However, the authorities maintained that the deemed credit already availed covered both duties, and additional credit was not permissible.

3. The issue of limitation under Rule 57-I was raised by the appellants, claiming that the notice was time-barred for credits taken before August 1989. The lower authorities rejected this plea, citing provisional assessment as the basis for disregarding the limitation period. The Tribunal disagreed, emphasizing that the starting point of limitation should be the date of taking credit, not the provisional assessment date.

4. The Tribunal analyzed the acceptance of certificates issued by Public Sector Undertakings as duty-paying documents. While certain instructions limited the acceptance to specific entities, no government order withdrew the facility for certificates from Hindustan Zinc Ltd. The Tribunal highlighted the practical challenges faced by users in obtaining gate passes, supporting the appellants' reliance on certificates and invoices. Considering the absence of any withdrawal of the facility for such certificates, the Tribunal set aside the duty demand, allowing the appeal.