2002 (1) TMI 1040 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty on repacked goods due to the introduction of Chapter Note 3 to Chapter 32 of the Central Excise Tariff.
2. Applicability of Modvat credit on duty paid on bulk products to neutralize the confirmed duty.
3. Denial of Modvat credit based on the lack of separate registration of premises where repacking activities took place.
4. Imposition of penalty for non-payment of duty and denial of Modvat credit.

Issue 1:
The judgment addresses the confirmation of duty amounting to Rs. 15,43,551.74 on repacked goods following the introduction of Chapter Note 3 to Chapter 32 of the Central Excise Tariff. The appellant argued that they challenged the introduction of the Chapter Notes through a Writ Petition under the Provisional Collection of Taxes Act, 1931, and started paying duty after the Act came into effect. The Tribunal acknowledged the appellant's submission but remanded the matter to quantify the final duty demand after considering Modvat credit.

Issue 2:
Regarding the applicability of Modvat credit to neutralize the confirmed duty, the Tribunal agreed with the appellant's counsel that Modvat credit on inputs should be extended to the assessees for subsequent duty demands. As the exact Modvat credit available was not provided, the matter was remanded to the original adjudicating authority for quantification based on documentary evidence.

Issue 3:
The denial of Modvat credit due to the lack of separate registration of premises where repacking activities occurred was contested by the appellant. The Tribunal ruled in favor of the appellant, stating that separate registration was unnecessary when the area was already registered with the Central Excise Authorities. The demand of duty amounting to approximately Rs. 5.71 lakhs was set aside, along with the imposed penalty of Rs. 20,000.

Issue 4:
The judgment also addressed the imposition of a penalty of Rs. 20,000 for non-payment of duty and denial of Modvat credit. The penalty was set aside along with the demand for duty, as the premises where repacking activities took place were already registered with the Central Excise Authorities, negating the justification for the denial of Modvat credit.

In conclusion, the Tribunal remanded the matter for quantifying the final duty demand after considering Modvat credit, set aside the demand of duty and penalty related to the lack of separate registration, and disposed of both appeals accordingly.