2004 (7) TMI 459 - AT - Central Excise

Tribunal revokes duty demand, penalties despite delayed credit reversal, emphasizes timing shouldn't bar benefit.

The Tribunal allowed the appeal, set aside the impugned order, and revoked the duty demand and penalties. It held that the benefit of Notification No. ... Exemption - Cenvat/Modvat - Reversal of credit - Brought out items Issues:Eligibility of benefit of Notification No. 3/2001 when duty paid chassis were used in fabrication without taking Modvat credit.Analysis:The case revolved around the eligibility of the benefit of Notification No. 3/2001 concerning duty paid chassis used in the fabrication of bus bodies without taking Modvat credit. The appellants purchased duty paid chassis but did not avail Modvat credit on them. However, they utilized Modvat credit on other items like paints and glasses, which were subsequently used in the construction of the bodies on the chassis. The issue arose as duty demands were imposed, and the benefit of the notification was denied due to the failure to reverse the credit on paints and glasses before their utilization in the bodies. The Tribunal referred to various precedents, including decisions of the Hon'ble Supreme Court and other Tribunal judgments, to establish that the benefit of a notification could still be availed even if the Modvat credit was not taken initially but later reversed. The Tribunal emphasized that the reversal of credit, even after goods clearance, could entitle the appellant to the notification's benefit. It was noted that the duty part of the credit in the register was not utilized and had lapsed as the appellant was no longer under the Excise net. The Tribunal rejected the argument that the benefit of the notification could be denied based on the timing of credit reversal, especially when the credit had lapsed entirely. Consequently, the appeal was allowed, the impugned order was set aside, and the duty demand along with penalties was revoked.This detailed analysis of the judgment highlights the key legal issues, the arguments presented, and the Tribunal's reasoning in deciding the case regarding the eligibility of the benefit of Notification No. 3/2001 in the context of Modvat credit utilization on duty paid chassis and related items used in fabrication.