2004 (5) TMI 489 - AT - Central Excise

Tribunal Upholds Revenue's Appeal Rejection on Credit Reversal Dispute

The Tribunal rejected the Revenue's appeal, upholding the order by the Commissioner (Appeals) regarding the reversal of credit by M/s. Bajaj Auto Ltd. on ... Cenvat/Modvat - Reversal of Issues:1. Dispute regarding reversal of credit on removal of capital goods.2. Applicability of duty rate on the date of removal of capital goods.3. Interpretation of Rule 57F(1)(ii) post-amendment on 29-6-95.4. Comparison of judgments in similar cases pre and post-amendment.Analysis:The appeal before the Appellate Tribunal concerns a dispute regarding the reversal of credit by M/s. Bajaj Auto Ltd. upon the removal of certain capital goods during a specific period. The core issue revolves around whether the respondents were obligated to reverse the credit at the rate applicable on the date of removal of the capital goods, which was higher than the rate at which the credit was initially taken. The duty amount and penalty imposed on the respondents were contested by the Revenue through the instant appeal against the order-in-appeal passed by the Commissioner (Appeals).Upon hearing both sides, the Tribunal delved into the interpretation of Rule 57F(1)(ii) in light of relevant judgments. The Revenue relied on precedents analyzing the provisions of the rule, particularly emphasizing a judgment in the case of CCE, Meerut v. Polar Industries Ltd. The Tribunal noted a crucial amendment to the rule post-29-6-95, which altered the requirements for credit reversal to be equivalent to the amount of credit availed. This change rendered the previous judgment inapplicable to the current scenario, as the dispute at hand pertained to a period post-amendment. Additionally, the Tribunal highlighted the significance of a Larger Bench judgment in a related case, emphasizing that reversal of credit equivalent to the credit taken at the time of receipt of inputs was in accordance with the provisions of Rule 57F(1)(ii).In conclusion, the Tribunal rejected the appeal by the Revenue, affirming the order passed by the Commissioner (Appeals). The decision was grounded in the analysis of the rule amendments, precedents, and the specific circumstances of the case, ultimately upholding the reversal of credit made by the respondents as per the applicable provisions.