2005 (7) TMI 274 - AT - Central Excise

Summary

Issues: Modvat credit on waste and scrap of capital goods, duty liability, limitation period for demand, challenge to vires of provisions, reduction of penalty

In the judgment delivered by the Appellate Tribunal CESTAT, MUMBAI, the main issue revolved around the confirmation of Modvat credit against the appellant concerning waste and scrap of capital goods cleared during a specific period. The appellant argued that waste and scrap from modvatable capital goods should not attract duty liability as they are not considered as manufactured final products. However, the Tribunal noted that previous decisions cited by the appellant did not address the specific provisions of Rule 57S(2)(c) which require duty payment on cleared capital goods. Additionally, the appellant's contention challenging the vires of the provision was dismissed as the Tribunal is not the appropriate platform for such challenges.

Another issue raised was the invocation of a longer period of limitation for the demand. The Commissioner (Appeals) upheld this based on the appellant's failure to provide documentary evidence showing that the clearance of capital goods as waste and scrap without duty payment was known to the department. The Tribunal supported this decision by referencing a previous case and highlighting the lack of evidence in the appellant's appeal grounds or statutory books of accounts.

Ultimately, the Tribunal confirmed the demand of duty against the appellant due to the lack of substantiated arguments and evidence. However, considering the circumstances, the penalty amount was reduced from Rs. 3,88,212/- to Rs. 50,000/-. Despite this modification, the appeal was rejected, and the decision was pronounced in court.