2002 (7) TMI 603 - AT - Central Excise

Tribunal rules on Revenue's appeal, addresses Modvat credit eligibility and duty shortfall

The Tribunal partially allowed the Revenue's appeal, deleting the Commissioner's directions for a refund. It emphasized compliance with Circulars and ... Demand - Limitation - Refund - Modvat/Cenvat - Eligibility of credit Issues:1. Alleged illegal availing of SSI exemption by the respondent.2. Validity of show cause notice issued in 1996 for incidents in 1992.3. Adjustment of Central Excise Duty in RG 23A P-II.4. Eligibility for Modvat credit and debiting Modvat credit in registers.Analysis:1. The appeal involved allegations of M/s. Siri Sri Plastics (P) Ltd. illegally availing SSI exemption for 1991-92 and 1992-93, resulting in a duty shortfall of Rs. 4,20,858. The department found the assessee had suppressed clearances and enjoyed the exemption wrongly. The Commissioner, however, found no evidence of fraud or wilful misstatement by the department, dropped the proceedings, and even considered refunding the amount.2. The Revenue contended that the show cause notice issued in 1996 for incidents in 1992 was justified due to the assessee's wilful suppression of clearances. They argued that the invoking of proviso to Section 11A was proper. The Revenue also raised concerns about the timing of the registration and the approval of RT 12, emphasizing the significance of the exemption limits and statutory obligations.3. The issue of adjusting Central Excise Duty in RG 23A P-II was raised. The Revenue argued that there was no provision for retrospective application of Modvat Credit for goods already cleared under exemption. The Commissioner's failure to address this adjustment was highlighted, along with the assessee's plea for a refund.4. The eligibility for Modvat credit and debiting Modvat credit in registers was extensively discussed. The Tribunal found that the assessments and debits made by the assessee were in line with Circular No. 2/93 C.Ex. 6, which prescribed procedures for time-barred duties. The Tribunal upheld the debiting of Modvat credit in registers and rejected the Revenue's arguments based on previous case law that did not consider the Modvat scheme's applicability.In conclusion, the Tribunal partially allowed the Revenue's appeal by deleting the Commissioner's directions regarding the favorable consideration of refund, emphasizing compliance with Circulars and the eligibility for Modvat credit as per the applicable rules and regulations.