Commissioner of C. Ex. Vs. Bhushan Industries Ltd. - Court Judgment

Excerpt:
2. the revenue filed this appeal against the order-in-appeal passed by the commissioner (appeals).3. brief facts of the case are that the respondents are engaged in the manufacture of excisable goods classifiable under chapter heading 72 of central excise tariff act, 1985. the respondents opted for compounded levy scheme for payment of excise duty on their final product. as per compounded levy scheme, credit of duty lying unutilised was to lapse on the first day of august 1997.4. a show cause notice was issued to the respondent for reversal of credit of rs. 12,01,603/- in respect of the inputs lying in their stock on the date when they opted for compounded levy scheme under section 3a of the central excise act. the adjudicating authority confirmed the demand and imposed a penalty. the respondents filed the appeal and the commissioner (appeals) allowed the appeal.5. the contention of the revenue is that as respondents opted for compounded levy scheme, therefore, the credit of the inputs lying in their stock was to lapse. the contention of the respondents is that credit of rs. 19,790/- was lying in their modvat account on the day they opted for the compounded levy scheme. the remaining amount of credit was already utilised towards payment of duty, therefore, that amount cannot be recovered. however, the respondents admitted that they are only liable to reverse the credit of rs. 19,790/- which was lying in their modvat credit on the date when they opted for compounded levy scheme.c.c.e., rajkot v. ashok iron and steel fabricator, reported in 2002 (140) e.l.t. 277 (tri. - lb) = 2002 (48) rlt 789 (lb) held that the utilised credit is not liable for reversal when the final product is exempted from payment of duty.7. in the present case, the revenue is admitting that some of the credit was utilised for payment of duty before opting the compounded levy scheme by the respondents. as per the compounded levy scheme, the only credit of duty lying unutilised was to lapse, therefore, only the credit of rs. 19,790/- which was lying unutilised was to lapse and the credit utilised for payment of duty before opting for the compounded levy scheme is not recoverable. the appeal is disposed of as indicated above.

Judgment:
2. The Revenue filed this appeal against the order-in-appeal passed by the Commissioner (Appeals).

3. Brief facts of the case are that the respondents are engaged in the manufacture of excisable goods classifiable under Chapter Heading 72 of Central Excise Tariff Act, 1985. The respondents opted for Compounded Levy Scheme for payment of excise duty on their final product. As per Compounded Levy Scheme, credit of duty lying unutilised was to lapse on the first day of August 1997.

4. A show cause notice was issued to the respondent for reversal of credit of Rs. 12,01,603/- in respect of the inputs lying in their stock on the date when they opted for Compounded Levy Scheme under Section 3A of the Central Excise Act. The adjudicating authority confirmed the demand and imposed a penalty. The respondents filed the appeal and the Commissioner (Appeals) allowed the appeal.

5. The contention of the Revenue is that as respondents opted for Compounded Levy Scheme, therefore, the credit of the inputs lying in their stock was to lapse. The contention of the respondents is that credit of Rs. 19,790/- was lying in their Modvat account on the day they opted for the Compounded Levy Scheme. The remaining amount of credit was already utilised towards payment of duty, therefore, that amount cannot be recovered. However, the respondents admitted that they are only liable to reverse the credit of Rs. 19,790/- which was lying in their Modvat credit on the date when they opted for Compounded Levy Scheme.C.C.E., Rajkot v. Ashok Iron and Steel Fabricator, reported in 2002 (140) E.L.T. 277 (Tri. - LB) = 2002 (48) RLT 789 (LB) held that the utilised credit is not liable for reversal when the final product is exempted from payment of duty.

7. In the present case, the Revenue is admitting that some of the credit was utilised for payment of duty before opting the Compounded Levy Scheme by the respondents. As per the Compounded Levy Scheme, the only credit of duty lying unutilised was to lapse, therefore, only the credit of Rs. 19,790/- which was lying unutilised was to lapse and the credit utilised for payment of duty before opting for the Compounded Levy Scheme is not recoverable. The appeal is disposed of as indicated above.