2004 (10) TMI 182 - AT - Central Excise

CESTAT rules in favor of appellants regarding duty demand on unutilized inputs

The Appellate Tribunal CESTAT, New Delhi, ruled in favor of the appellants in a case concerning duty demand on unutilized inputs under the modvat credit ... Demand Issues: Duty demand on unutilized inputs under modvat credit facilityIn this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue pertains to duty demand concerning unutilized inputs under the modvat credit facility. The appellants, engaged in manufacturing CTD bars/round bars, availed the modvat credit facility under Rule 57A. However, this facility was withdrawn via Notification No. 18/97 from 1-8-97 for goods falling under Chapter heading 7214.90 of the CETA on which duty had been paid under Section 3 of the Act. Consequently, the appellants, being manufacturers of goods under Chapter heading 7214.90, shifted to the compounded levy scheme for duty payment under Section 3A. As a result, the balance credit of inputs on the notified date of 1-8-97, which remained unutilized, lapsed as per Rule 57F(17)(c). Citing the precedent of Savitri Concast Pvt. Ltd. v. CCE, Jaipur [2001 (138) E.L.T. 296], where a similar duty demand was disallowed for an assessee who transitioned to the compounded levy option under Section 3A, the Tribunal held that no further duty could be demanded from the appellants for the inputs in stock. The Tribunal found the impugned order unsustainable and set it aside, allowing the appeal of the appellants with consequential relief as per law.