Judgment:
1. In this appeal, the appellants have challenged the validity of the impugned order-in-appeal dated 24-1-2002 vide which the Commissioner (Appeals) has affirmed the order-in-original disallowing Modvat credit of Rs. 3,40,347.20 and imposing penalty of Rs. 35,000/- on them.
2. The facts are not much in dispute. The appellants are engaged in the manufacture of iron/steel forgings. They had been availing the benefit of SSI exemption Notification 16/97-C.E., dated 1-4-1997 and after crossing the slab limit of Rs. 100 lakhs on 8-1-1998, they started paying Central Excise duty at the tariff rate and simultaneously also opted to avail Modvat credit on the inputs under Rule 57G of the Rules, for which they even filed a declaration under Rule 57A on 23-12-97. On scrutiny of their RT 12 returns, it revealed that they had availed Modvat credit of the disputed amount of Rs. 3,40,374.20 on the inputs which were received by them in their factory prior to 8-1-98. This credit was availed by them vide entry 1 to 27 during the period 1-1-98 to 6-1-98 in their RG 23A Part II. But the same was not admissible to them, as they were availing the concessional duty assessment under the said Notification, during that period. Accordingly, a show cause notice was served on them for the recovery of the amount which they had availed illegally as Modvat credit and after getting their reply, the adjudicating authority confirmed the demand and imposed penalty as detailed above. That order of the Assistant Commissioner has been affirmed by the Commissioner (Appeals) through the impugned order.
3. No Counsel has come present on behalf of the appellants. Shri Jagbir Singh, Company representative is present on behalf of the appellants and requests for adjournment. But I do not find sufficient ground to allow adjournment. I have heard the learned DR and gone through the record.
4. The bare perusal of the impugned order shows that the Modvat credit of the disputed amount was availed by the appellants during the period 1-1-98 to 6-1-98 on the inputs received by them in the factory, but during that period, they were already availing the benefit under the SSI exemption Notification 16/97-C.E., dated 1-4-97. Therefore, legally they could not avail Modvat credit on the inputs of the disputed amount. The plea taken up by the appellant is in fact that they only made credit entry in the record but did not utilise the Modvat credit.
But this plea, in my view, has been rightly rejected by the authorities below. The bare perusal of Para 2 of the Notification 16/97 shows that the manufacturer is not entitled to avail the credit under Rule 57A on the specified goods, when he is enjoying the benefit of this Notification. The very availment of Modvat credit, has been prohibited under this Notification. For availing the credit, it is not essential that there should be actual utilisation of the same by the assessee.
The actual utilisation, as is evident from the wording of Para 2 of this Notification, is required only in a case of capital goods where utilisation of credit has been debarred to the assessee, working under the SSI exemption Notification.
5. The appellants, as observed above, could not legally avail Modvat credit of the disputed amount during the period detailed above when they were availing the benefit of SSI Exemption Notification No.16/97-C.E. The impugned order passed by the Commissioner (Appeals) is, therefore, perfectly valid and it does not suffer from any legal infirmity so as to call for any interference.