2001 (3) TMI 605 - AT - Central Excise

Tribunal Upholds Disallowance of Modvat Credit; Clarifies Retrospective Applicability

The tribunal upheld the disallowance of Modvat credit under Rule 57-I of the Central Excise Rules, 1944, due to the excess credit availed by the ... Stay/Dispensation of pre-deposit - Demand of Modvat Issues: Disallowance of Modvat credit under Rule 57-I of Central Excise Rules, 1944; Interpretation of C.B.E.C. Circular No. 486/52/99-CXIssue 1: Disallowance of Modvat credit under Rule 57-I of Central Excise Rules, 1944The Asstt. Commissioner disallowed Modvat credit amounting to Rs. 1,11,115/- and Rs. 50,842/-respectively, stating that the credit availed was in excess of the duty paid on inputs, as reflected in challans issued by M/s. Steel Authority of India Ltd. (SAIL). The Asstt. Commissioner emphasized that Modvat credit can only be availed to the extent of duty paid on inputs, and if duty has not been paid, credit cannot be claimed. The appellant argued that they were not responsible for the discrepancy in duty paid between the depots of SAIL and the plants. The Commissioner (Appeals) upheld the Asstt. Commissioner's orders, leading to the second stage appeals.Issue 2: Interpretation of C.B.E.C. Circular No. 486/52/99-CXThe appellant relied on Circular No. 486/52/99-CX, which outlined a scheme for reconciling the weight of materials despatched from plants with those sold from stockyards/depots on an annual basis. The circular mandated that in case of any excess quantity, the plants should pay excise duty at the prevailing rate. The appellant contended that the differential duty demand should be met by the concerned SAIL plant, not them. However, the tribunal noted that the scheme could only have prospective application and could not be applied retrospectively for the relevant period. The tribunal found no deficiency in the lower authorities' orders, stating that the appellants had indeed availed credit in excess of the duty paid on inputs, making them liable to repay the same. The tribunal directed the appellants to deposit the entire confirmed duty amount by a specified date for compliance.In conclusion, the tribunal upheld the disallowance of Modvat credit under Rule 57-I of the Central Excise Rules, 1944, due to the excess credit availed by the appellants beyond the duty paid on inputs. The tribunal also clarified the limited retrospective applicability of the C.B.E.C. Circular No. 486/52/99-CX scheme, directing the appellants to repay the excess duty amount as confirmed by a specified deadline.