2001 (2) TMI 700 - AT - Central Excise

Summary

Issues:
Classification of gobbing stirrers under Customs; Time limit for Modvat credit on capital goods.

Analysis:
1. The appellants filed two appeals with an application for additional grounds. The first ground was the classification of gobbing stirrers under Chapter sub-heading 8475.90 for CVD levying, and the second was the time limit for Modvat credit on capital goods as per a Board's Circular from 1996.

2. The appellants' counsel argued that the gobbing stirrers were correctly classified under Chapter 84.75 as parts of machinery, not under Chapter 69 for ceramic products. The Customs had classified these stirrers under 8475.90, allowing Modvat credit even before installation, which was revenue neutral.

3. The Department contended that the stirrers were part of ceramic machinery under Chapter 69, disallowing Modvat credit before installation. They also argued against adjusting duty amounts paid on different items, maintaining the demand for duty payment.

4. The Tribunal found that the gobbing stirrers were rightly classified under Chapter 84/85 as parts of machinery, allowing Modvat credit before installation. The demand for Rs. 34,61,193/- was set aside, and the duty paid amount of Rs. 14,39,487/- was permitted to be credited in the appellants' accounts.

5. The Tribunal imposed a penalty of Rs. 1 lakh for the non-payment of duty on a gobbing stirrer at the time of sale, where Modvat credit was taken. The penalty was justified as duty was payable but not paid at the time of removal and sale.

6. In conclusion, the Tribunal upheld the demand of Rs. 13,54,277/-, allowed the credit of Rs. 14,39,487/- in the appellants' accounts, set aside the demand of Rs. 34,61,193/- for Modvat credit, and imposed a penalty of Rs. 1 lakh for non-payment of duty at the time of sale.