2002 (6) TMI 365 - AT - Central Excise

Tribunal overturns duty demand & penalty, ruling in favor of SRF Ltd on AED credit utilization

SRF LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI

The Tribunal allowed the appeal by M/s. SRF Ltd, setting aside the duty demand confirmation of Rs. 1,01,73,524 under Rule 9(2) of the C.E. Rules, 1944, ... Modvat/Cenvat Issues:1. Duty demand confirmation under Rule 9(2) of the C.E. Rules, 1944 and penalty imposition.2. Availing credit of specified duty paid on inputs for final product manufacture.3. Utilization of credit of Additional Excise Duty (AED) on unprocessed tyre cord fabric.4. Compliance with proviso to Rule 57F(12) for credit utilization.5. Interpretation of Rule 57F(12) in the context of the case.6. Comparison with previous judgments on similar issues.1. Duty Demand Confirmation and Penalty Imposition:M/s. SRF Ltd appealed against an order confirming a duty demand of Rs. 1,01,73,524 under Rule 9(2) of the C.E. Rules, 1944. The Commissioner imposed a penalty of Rs. 5,00,000 on the appellants. The duty demand was related to the Additional Excise Duty (AED) payable on unprocessed tyre cord fabric cleared during a specific period.2. Availing Credit of Specified Duty Paid on Inputs:The appellants, engaged in manufacturing various products falling under specific Chapters, availed credit of specified duty paid on inputs under Rule 57A of the CE Rules, 1944. They also utilized credit on capital goods used in final product manufacture. The case involved the manufacture of Unprocessed Tyre Cord Fabrics (UTF) and the utilization of credit on AED paid on these fabrics.3. Utilization of Credit of Additional Excise Duty on Unprocessed Tyre Cord Fabric:The issue arose when it was observed that the appellants wrongly availed credit of AED on UTF consumed captively and purchased from the market for payment of AED on UTF cleared for home consumption. This discrepancy led to the duty demand and penalty imposition by the Commissioner.4. Compliance with Proviso to Rule 57F(12) for Credit Utilization:The appellants argued that they satisfied the conditions under the proviso to Rule 57F(12) for utilizing credit of AED paid on UTF. They contended that the conditions, including declaring inputs and final products, were met, allowing them to use the credit for payment of duty on final products.5. Interpretation of Rule 57F(12) in the Context of the Case:The debate centered on whether the appellants' actions complied with Rule 57F(12) regarding the utilization of credit on AED paid on UTF. The department argued that the appellants were not following the correct procedure, as UTF cannot act as both an input and a final product simultaneously.6. Comparison with Previous Judgments on Similar Issues:The Tribunal referred to previous judgments, including one involving Modi Rubber Ltd., to support the appellants' argument. The Tribunal found that the issue was no longer res integra, as similar cases had been decided in favor of the appellants previously. Following the precedent set by previous decisions, the Tribunal set aside the impugned order and allowed the appeal, directing consequential relief in accordance with the law.