1998 (1) TMI 317 - AT - Central Excise

Summary

Issues:
Calculation of reversal of Modvat Credit for exempted final products based on inputs used in manufacture.

Analysis:
The appellants, engaged in manufacturing footwear, availed Modvat Credit on duty-paid raw materials used in production. Some final products were exempt from duty, requiring reversal of Credit under Rule 57C. Dispute arose over the method of calculating this reversal. Previous Tribunal order set aside duty demand and penalty but left open the calculation method, remanding it to the Commissioner. The Commissioner directed compliance with Trade Notice for monthly input accounting. Appellant argued for annual filing based on a modified Circular, while Respondent cited the original Circular's applicability for past periods.

In response, the appellant contended that the 1996 Circular, amending the 1994 Circular, should apply retrospectively. The Circular clarified that Credit on common inputs is allowed even if not used in final product manufacture, provided debited in RG 23A Part-II before removal of exempted products. As the Commissioner did not have the benefit of the latest Circular, the judgment set aside the impugned order, remanding the matter for a fresh decision based on the 1996 Circular's instructions. The appeal was allowed for a remand to consider the latest Circular's provisions.