2000 (10) TMI 440 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit on certain inputs and capital goods.
2. Competence of the Asst. Commissioner in adjudicating cases involving duty of excise.
3. Interpretation of Rules 57-I and 57U of the Central Excise Rules, 1944.
4. Authority of the Asst. Commissioner in disallowing Modvat credit.
5. Conflicting decisions of the Tribunal regarding the powers of the Asst. Commissioner.
6. Reference application for a point of law to be determined.

Admissibility of Modvat Credit:
The case involved the admissibility of Modvat credit on certain inputs and capital goods by the respondents. The department alleged that the Modvat credit was not admissible, leading to a dispute. The Asst. Commissioner disallowed the credit, which was challenged by the respondents before the Commissioner (Appeals) and subsequently before the Tribunal. The Tribunal dismissed the appeals, stating that the Asst. Commissioner had the power to adjudicate cases involving duty of excise without limit. The Revenue contended that a point of law arises regarding the Tribunal's observations on the Board's Circular.

Competence of the Asst. Commissioner:
The Commissioner (Appeals) held that the cases decided by the Asst. Commissioner were beyond his competence as the Modvat credit involved exceeded a certain amount. However, the Tribunal disagreed and upheld the Asst. Commissioner's powers to adjudicate cases without limit. This led to a conflict in decisions and raised the question of the Asst. Commissioner's jurisdiction in deciding such matters.

Interpretation of Central Excise Rules:
Under Rules 57-I and 57U of the Central Excise Rules, the proper officer may determine the amount of credit disallowed after serving notice to the manufacturer. The jurisdiction of the Asst. Commissioner, Kota, was established as the proper officer in this case, as the factory of the respondents fell within his jurisdiction.

Authority of the Asst. Commissioner:
The CBEC's decision and Jaipur Commissionerate's instruction clarified that SCNs for disallowing Modvat credit would be decided by the Asst. Commissioner, except in cases of intentional evasion of excise duty. The Revenue argued that the Asst. Commissioner did not exceed his jurisdiction in deciding the cases, citing conflicting decisions of the Tribunal on the matter.

Conflicting Tribunal Decisions:
The Tribunal acknowledged conflicting decisions on the powers of the Asst. Commissioner in disallowing Modvat credit under Rule 57-I and 57U. The reference application was allowed as a point of law arose due to these conflicting decisions, leading to a referral to the Rajasthan High Court for clarification.

Reference Application for Point of Law:
After considering the submissions and conflicting decisions, the Tribunal allowed the reference application and rejected the Review of Order application. The matter was referred to the Rajasthan High Court for a considered view on the Tribunal's observations regarding the Board's Circular and the powers of the Asst. Commissioner for adjudication.