1994 (9) TMI 159 - AT - Central Excise

Tribunal allows appeal on Modvat credit denial for manufacturing inputs, supports packaging materials eligibility.

The Tribunal allowed the appeal challenging the denial of Modvat credit for ramming mass and gases used in the manufacturing process, citing supportive ... Modvat Credit Issues:1. Modvat credit denial for ramming mass and gases used in manufacturing process.2. Eligibility of packaging materials for modvat credit.3. Plea of limitation for wrongly availed modvat credit.Analysis:The appellants challenged the denial of Modvat credit for ramming mass and gases used in their manufacturing process. The consultant argued that the issue was covered by a larger Bench decision and a Calcutta High Court judgment. Additionally, they contended that the notice issued was time-barred as it exceeded the six-month period and lacked suppression or misstatement. The Departmental Representative conceded that the decisions cited supported the appellants' case, leaving the final decision to the Bench. The Tribunal found the consultant's contentions valid and allowed the appeal based on the cited decisions, emphasizing that packaging materials used for eligible inputs were also entitled to Modvat credit.Regarding the plea of limitation for wrongly availed Modvat credit, the Tribunal acknowledged conflicting judgments from various High Courts on the application of time bar in such cases. While there were precedents supporting the time bar, the Gujarat High Court had ruled otherwise. The Tribunal noted a proposal for a reference to the Supreme Court due to these conflicting judgments. However, as the appeal was allowed on merits, the Tribunal did not delve into the limitation issue. The notices in this case were issued before the Rule 57-I amendment, which made it self-contained with a six-month notice requirement, further complicating the matter.The Collector of Central Excise, Indore filed a cross-objection seeking to uphold the order-in-appeal and dismiss the appeal. However, since the appeal was allowed in favor of the appellants, the cross-objection was deemed misconceived and automatically disposed of.