1998 (5) TMI 273 - AT - Central Excise

Summary

Issues:
Violation of Rule 57C of Central Excise Rules regarding Modvat credit on exempt products, validity of show-cause notice quantification, scope of show-cause notice, jurisdiction of Assistant Commissioner, interpretation of Bombay High Court judgment, reliance on Tribunal decisions, sustainability of duty demand, inclusion of additional clearances in demand.

Violation of Rule 57C of Central Excise Rules regarding Modvat credit on exempt products:
The appellant, a manufacturer of BOPP films under the modvat credit scheme, cleared consignments at nil duty rate to export-oriented units and another unit. The issue arose when a show-cause notice was issued for violating Rule 57C, disallowing modvat credit on inputs used in products exempt from duty. The Assistant Commissioner confirmed a duty demand, leading to the appeal.

Validity of show-cause notice quantification and scope:
The appellant argued that the show-cause notice lacked quantification, citing a Bombay High Court judgment requiring clear specification of the amount due. They contended that the notice exceeded its terms by demanding recovery beyond the specified clearances. The respondent argued that the notice covered the entire amount mentioned in the Assistant Commissioner's order and referred to a Tribunal decision on duty-free clearances to export-oriented units.

Jurisdiction of Assistant Commissioner and interpretation of judgments:
The Tribunal found that the show-cause notice did not specify the duty amount but provided sufficient details for computation. It distinguished the Bombay High Court judgment, stating the notice in question was different. The Tribunal also analyzed the Tribunal decision on duty-free clearances pre-1992 and upheld the duty demand for the specified clearances while rejecting additional demands not covered by the notice.

Sustainability of duty demand and inclusion of additional clearances:
The Tribunal concluded that the demand for clearances beyond the specified three AR3A was unsustainable in law. It upheld the duty demand for the mentioned clearances based on the Tribunal decision's ratio pre-1992. The appeal was disposed of, confirming the duty demand for the specified clearances and rejecting demands for additional clearances not covered by the show-cause notice.