2001 (9) TMI 420 - AT - Central Excise

Summary

Issues:
1. Entitlement for certificate under Rule 57E of the Central Excise Rules for availing Modvat credit.
2. Application of sub-rule (3) to Rule 57E in case of short levy or non-levy due to fraud, collusion, or suppression of facts.

Issue 1: Entitlement for Certificate under Rule 57E
The appeal involved a dispute regarding whether the respondent company was entitled to a certificate under Rule 57E of the Central Excise Rules to avail Modvat credit. The Revenue claimed that the differential duty of excise was demanded from the respondent due to a change in the classification of the manufactured product. The Asstt. Commissioner denied the certificate under Rule 57E, stating that the respondents had not disclosed crucial information about the nature and use of the goods. The Revenue argued that since duty was short paid due to the suppression of facts, sub-rule (3) of Rule 57E prevented the issuance of the certificate.

Issue 2: Application of sub-rule (3) to Rule 57E
The respondent argued that the show cause notice did not invoke fraud, collusion, or wilful mis-statement, and they voluntarily paid the duty even for the period not demanded. The respondent contended that they had not suppressed any facts and had been compliant with the classification requirements. The Tribunal analyzed Rule 57E, noting that sub-rule (2) allows the final product manufacturer to avail additional credit if duty is recovered from the input manufacturer. However, sub-rule (3) restricts this provision in cases of short levy due to fraud, collusion, or suppression of facts. The Tribunal found that since the show cause notice did not allege any of the elements under sub-rule (3), the certificate could not be denied based on those grounds. Citing a Supreme Court decision, the Tribunal emphasized the importance of specific allegations in the show cause notice to invoke relevant provisions.

In conclusion, the Tribunal rejected the Revenue's appeal, stating that as the show cause notice did not contain allegations of fraud, collusion, or suppression of facts, the denial of the certificate under Rule 57E was unwarranted. The Tribunal upheld the respondent's entitlement to the certificate for availing Modvat credit, emphasizing the necessity of specific allegations in legal proceedings to invoke relevant legal provisions effectively.