2004 (3) TMI 209

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..... how cause notices but not allowing Modvat credit of Rs. 6,32,291/- (Rupees Six Lacs thirty-two thousand two hundred ninety one only) availed on Caustic Soda Chlorine used for manufacture of intermediate exempted products which are further used in the manufacturing process of finished dutiable products. The Dy. Commissioner of C. Excise, Kalyan has further imposed a penalty of Rs. 5,000/- was imposed. The Dy. Commissioner has further disallowed Modvat on kraft paper. The restoration of Modvat credit in respect of Caustic Soda Chlorine to the tune of Rs. 6,32,291/- was not allowed holding that Modvat credit of duty paid on Caustic Soda Chlorine used for manufacture of intermediate exempted product is treated water, which in turn was use .....

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..... credit was disallowed the provisions of Section 11B are not applicable and hence the said stand taken by the Commissioner of C. Excise (Appeals). (b) Input Chlorine Caustic Soda used in the manufacture of intermediate product Sodium Hypochlorite and the same is captively used in the manufacture of Rayon yarn. The Caustic soda is also used in the Sodium sulphide which is partly captively used in the manufacture of the final product viz. Rayon yarn and partly sold to outside parties on payment of duties. (c) Caustic Soda is also used for demineralisation of water for generation of steam. The steam is used for the manufacture process of finished dutiable products. It is submitted that since steam generated is exempted prod .....

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..... 32,291/- as regarding Chlorine Caustic Soda. 4. As regards reversal of Modvat credit of Rs. 6,32,291/- on 1-5-1992 and 20-4-1993, there being no provision for restoration of Modvat credit in Central Excise Act, 1944, appellants were required to follow the procedure as prescribed under Section 11B of Central Excise Act, 1944, by filing a refund claim, which they have not filed, hence the Modvat credit of Rs. 6,32,291/- reversed by them is hit by the limitation of time bar. Finally, as the lower authority has not recorded any grounds of having contravened the provisions of Modvat rules, and had allowed the Modvat credit on merits, imposition of a penalty of Rs. 5,000/- under Rule 173Q was legally proper, correct and sustainable. - .....

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