2005 (4) TMI 400 - AT - Central Excise

Tribunal rules on Modvat credit eligibility & duty non-payment, deems interest inapplicable

The Tribunal held that the appellants were not entitled to Modvat credit under Notification No. 67/95 for H.R. strips but were eligible for deemed credit ... Confiscation of goods Issues:1. Confiscation of goods and Modvat credit eligibility.2. Applicability of Notification No. 67/95-C.E. and Notification No. 58/97-C.E.3. Confiscation of H.R. strips and steel tubes.4. Charge of interest under Section 11AB.5. Duty liability determination and rebate adjustment.Analysis:1. Confiscation of Goods and Modvat Credit Eligibility:The appeals involved a dispute regarding the confiscation of goods and Modvat credit eligibility. The Commissioner held that certain goods were liable for confiscation due to non-payment of appropriate duty. The appellants contended that they were entitled to Modvat credit on the duty-paid H.R. strips under the Compounded Levy Scheme. The Tribunal found that the appellants were not entitled to the benefit of Notification No. 67/95 for clearance of H.R. strips for tubes and pipes manufacturing. However, they were eligible for deemed credit under Notification No. 58/97 on H.R. steel used for tube production.2. Applicability of Notifications:The issue of the applicability of Notification No. 67/95-C.E. and Notification No. 58/97-C.E. was crucial in determining the duty liability of the appellants. The Tribunal clarified that the Compounded Levy Scheme covered the H.R. strips, making the Notification No. 67/95 inapplicable for duty exemption. However, the deemed credit under Notification No. 58/97 was applicable, necessitating a re-determination of duty on the manufactured tubes after allowing the deemed credit on H.R. strips.3. Confiscation of H.R. Strips and Steel Tubes:Regarding the confiscation issue, the Tribunal found that H.R. strips and steel tubes lying in the mill without clearance from the place of manufacture were not liable for confiscation. However, H.R. strips weighing 41.450 MT cleared without duty payment were rightly liable for confiscation. The Tribunal set aside the confiscation of certain goods while confirming the confiscation of others, adjusting the redemption fine accordingly.4. Charge of Interest under Section 11AB:The Tribunal addressed the charge of interest under Section 11AB, noting that interest was chargeable only in cases where the extended period applied for duty recovery. As the duty demand was within the normal limitation period, interest under Section 11AB was deemed inapplicable.5. Duty Liability Determination and Rebate Adjustment:In Appeal No. E/85/2004-NBC, the Commissioner's decision to grant rebate to the appellants was upheld. The Tribunal ordered the adjustment of the rebate amount with the duty liability to be paid on H.R. strips, affirming the Commissioner's decision.In conclusion, the Tribunal disposed of both appeals by addressing the various issues raised, providing clarity on duty liability, confiscation, Modvat credit eligibility, and interest charges, ensuring a fair and comprehensive resolution in line with the legal provisions and notifications cited in the case.