1999 (4) TMI 156 - AT - Central Excise

Tribunal Overturns Duty Demand & Modvat Disallowance for Nickel Scrap Manufacturers

The Tribunal set aside the duty demand confirmation, disallowance of Modvat credit, and penalty imposition in the case involving manufacturers of nickel ... Waste and scrap - Modvat Issues:1. Duty demand confirmation2. Modvat credit disallowance3. Penalty impositionAnalysis:1. Duty Demand Confirmation:The case involves an appeal against the confirmation of duty demand, disallowance of Modvat credit, and imposition of a penalty. The appellants, manufacturers of nickel scrap and other goods, cleared nickel scrap for captive consumption without maintaining proper accounts or filing necessary documents. The department alleged that the goods were not exempted by a specific notification and that Modvat credit was wrongly availed. The appellants argued that the goods were exempt based on a notification and referred to a previous Tribunal decision. The Tribunal analyzed the situation and found that the nickel waste and scrap were dutiable under a specific chapter sub-heading. Referring to a previous case, the Tribunal held that the notification in question would be effective retrospectively from a certain date, thus setting aside the duty demand confirmation.2. Modvat Credit Disallowance:Regarding the disallowance of Modvat credit, the department contended that duty was not paid on matrices for captive consumption, leading to the disallowance of credit on nickel used in their manufacture. However, the Tribunal noted a provision under Rule 57D allowing for variations in credit taken when exempt products arise at intermediate stages. Consequently, the disallowance of credit on nickel used for matrices' manufacture was deemed legally unsustainable.3. Penalty Imposition:As the first two allegations were not confirmed, the Tribunal concluded that the question of imposing a penalty did not arise. Therefore, based on the findings related to duty demand confirmation and Modvat credit disallowance, the impugned order was set aside, and the appeal was allowed.In summary, the Tribunal's decision revolved around interpreting relevant notifications, assessing the dutiability of goods, and applying legal provisions concerning Modvat credit. The judgment clarified the retrospective effect of notifications and upheld the appellants' contentions regarding duty demand and Modvat credit disallowance, ultimately leading to the setting aside of the penalty imposition.