2002 (6) TMI 419 - AT - Central Excise

Tribunal Upholds Disallowance of Modvat Credit for Additional Duties on Safety Belts Webbings

The Tribunal upheld the Commissioner of Customs & Central Excise (Appeals)'s decision to disallow Modvat credit for additional duties paid on Safety ... Modvat/Cenvat Issues:1. Interpretation of Rule 57A of the Central Excise Rules, 1944 regarding Modvat credit admissibility.2. Admissibility of Modvat credit for additional duty of Customs under Notification No. 356/76-Cus.3. Disallowance of Modvat credit by the Assistant Collector and Commissioner of Customs & Central Excise (Appeals).Issue 1: Interpretation of Rule 57A of the Central Excise Rules, 1944 regarding Modvat credit admissibility:The case involved the appellants, a manufacturing company, importing Safety Belts Webbings and availing Modvat credit for additional duties paid. The dispute arose when the Assistant Collector alleged a contravention of Rule 57A by wrongly availing Modvat credit on imported webbings. The Commissioner of Customs & Central Excise (Appeals) upheld the disallowance of Modvat credit. The appellants argued that the additional duty under Notification No. 356/76-Cus. should be admissible under Rule 57A. However, the Commissioner's order clarified that Modvat credit was only admissible for specific duties as per Notification No. 5/94-C.E. (N.T.), dated 1-3-94. The Commissioner emphasized that the credit was limited to duties equivalent to Central Excise duty and additional duties specified, excluding any other levies, as detailed in the Notification.Issue 2: Admissibility of Modvat credit for additional duty of Customs under Notification No. 356/76-Cus:The appellants contended that the additional duty under Notification No. 356/76-Cus. should be eligible for Modvat credit under Rule 57A. However, the Commissioner's order clarified that the Modvat credit was restricted to duties specified in Notification No. 5/94-C.E. (N.T.), dated 1-3-94, and did not extend to additional duties beyond those explicitly mentioned. The Commissioner emphasized that the admissibility of Modvat credit was limited to duties equivalent to Central Excise duty and specific additional duties, excluding any other levies imposed, such as the additional duty under Notification No. 356/76-Cus.Issue 3: Disallowance of Modvat credit by the Assistant Collector and Commissioner of Customs & Central Excise (Appeals):The Assistant Collector initially issued a show cause notice alleging a contravention of Rule 57A, leading to the disallowance of Modvat credit. The Commissioner of Customs & Central Excise (Appeals) upheld the disallowance based on the interpretation of Rule 57A and Notification No. 5/94-C.E. (N.T.), dated 1-3-94. The appellants' appeal against the Commissioner's order was dismissed, as the Tribunal concurred with the Commissioner's findings. The Tribunal supported the Commissioner's decision, emphasizing that the Modvat credit was only admissible for specific duties as outlined in the relevant notification, and any additional duties beyond the specified ones were not eligible for credit. The Tribunal found no grounds to interfere with the Commissioner's order and dismissed the appeal accordingly.