1999 (5) TMI 411 - AT - Central Excise

Summary

Issues:
1. Transfer of Central Excise license from one company to another.
2. Utilization of Modvat credit and money credit for duty payment.
3. Requirement of filing declarations under Rule 57G and Rule 57-O.
4. Denial of Modvat credit and money credit.
5. Procedural requirements for availing money credit.

Transfer of Central Excise License:
The case involved an arrangement between two companies for soap manufacturing, where one company leased its factory to the other. The dispute arose regarding the transfer of the Central Excise license to the leasing company. The Superintendent of Central Excise issued a license to the leasing company, making it the manufacturer from a specified date. The Collector confirmed the duty demand on finished goods and credit taken on inputs, leading to penalties on the companies and employees.

Utilization of Modvat and Money Credit:
The dispute revolved around the utilization of Modvat credit and money credit for duty payment during the period when the leasing company operated the factory. The Collector demanded duty payment on Modvat and money credit utilized by the leasing company, as no declaration was filed under Rule 57G or Rule 57-O. The appellants argued that the duty paid was valid, as the leasing company operated under the license, and previous declarations by the leasing company sufficed.

Requirement of Filing Declarations:
The Departmental Representative contended that without a declaration under Rule 57G or Rule 57-O, the Modvat credit and money credit could not be utilized for duty payment. The appellants argued that previous declarations by the leasing company were adequate, and the duty demand was unjustified.

Denial of Modvat and Money Credit:
The Collector disallowed the Modvat credit and money credit utilized by the leasing company, citing the absence of specific declarations under relevant rules. The appellants relied on tribunal decisions where a successor company was allowed to avail of proforma credit without specific permission, arguing that the leasing company should be entitled to utilize the credits.

Procedural Requirements for Availing Money Credit:
The case also discussed the procedural requirements for availing money credit, including the filing of declarations and obtaining acknowledgments. The Collector's delay in setting out procedural requirements and the subsequent trade notice were highlighted to support the appellants' claim that the demands for duty were not sustainable.

In conclusion, the appeals were allowed, the impugned order was set aside, and consequential relief was granted to the appellants. The judgment clarified the rights of a leasing company to operate under a transferred license and the applicability of previous declarations for credit utilization, emphasizing procedural and technical requirements for duty payment and credit utilization.