2000 (2) TMI 621 - AT - Central Excise

CEGAT Upholds Modvat Credit for Duty-Paid PVC Products

The Appellate Tribunal CEGAT, Mumbai upheld the Commissioner (Appeals) order allowing the respondent to take Modvat credit on duty paid for PVC bottles ... Modvat credit - payment of duty on exempted goods - Board circulars and prospective application - deposit versus dutyModvat credit - payment of duty on exempted goods - Board circulars and prospective application - Respondent entitled to take Modvat credit of duty paid on PVC bottles and jars manufactured by a third party pursuant to an earlier Board circular, notwithstanding a subsequent circular characterising such payments as deposits. - HELD THAT: - The duty in question was paid between September 1990 and February 1991 by the manufacturer acting in accordance with an earlier Board circular permitting payment of duty on goods that were otherwise exempt. A later Board circular (January 1991) held that amounts paid towards duty on exempted goods would be deposits rather than duty, but the departmental notice communicating that view (Nagpur trade notice) is dated 11-2-1991 and the Board's circular of December 1991 advised that past cases need not be reopened. The Collector (Appeals) accepted that the manufacturer had acted on the then prevailing departmental instruction and that the reversal by the Board should operate prospectively. Where an assessee takes credit in pursuance of an official instruction, a subsequent departmental change of view should not be allowed to frustrate actions lawfully taken under the earlier instruction; accordingly the credit taken by the respondent must be sustained. [Paras 2, 3, 4]Appeal dismissed; respondent's Modvat credit upheld.Final Conclusion: The departmental appeal is dismissed and the respondent is entitled to retain the Modvat credit taken in respect of duty paid by the manufacturer pursuant to the earlier Board circular; the subsequent change of departmental view does not operate retrospectively to deny that credit. The Appellate Tribunal CEGAT, Mumbai upheld the Commissioner (Appeals) order allowing the respondent to take Modvat credit on duty paid for PVC bottles and jars, even though the products were duty-exempt under Notification 53/88. The tribunal noted that the manufacturer acted in accordance with Board circulars permitting duty payment on exempted goods, and past cases should not be reopened. The appeal by the department was dismissed.