Commissioner of Central Excise vs K.K. Metals P. Ltd.

Jainendra Kumar Ranka, J.—This Central excise appeal is directed against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short "CESTAT") dated July 14, 2003. The brief facts, as emerging on the face of record, are that the respondent-assessee is engaged in the manufacture of parts and accessories of motor vehicles falling under Heading 87.08 and forging items of Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. They were also availing of Modvat credit in respect of furnace oil in terms of rule 57A of the Central Excise Rules, 1944.

The assessee took credit of duty paid on the furnace oil on the basis on the invoices issued by M/s. Bharat Petroleum Corporation Ltd., Bulk Depot, Jaipur (M/s. BPCL) under rule 57G wherein, in these invoices, BPCL have charged duty at 15 per cent, ad valorem from the customers during March, 1999 to May, 1999 and accordingly, claimed Modvat credit on the basis of such invoices. The assessing officer was of the view that the assessee had wrongly availed of Modvat credit amounting to Rs. 32,052 in excess on the basis of invoices issued by M/s. BPCL, as given in the annexure A to the show-cause notice. In pursuance of the show-cause notice an explanation was offered. It was contended by the assessee that they have debited the amount of Rs. 32,052 in their RG-23A Pt.-II vide entry No. 50, dated October 30, 1999, and that they have not used this amount of credit taken by them.

Ultimately the assessing officer accepted the contention of the assessee and allowed Modvat credit amounting to Rs. 32,052 by observing that the manufacturer of the input is a domestic unit as is apparent from the invoices issued by the depot of M/s. BPCL and further observed that Notification No. 5/1994-CE (N.T.), was superseded by Notification No. 21/1999-CE (NT.), dated February 28, 1999 it was further observed that Notification No. 21/1999-CE (N.T.), does not have any restriction regarding the admissibility of Modvat credit of duty paid on furnace oil as was the case with Notification No. 5/1994-CE (N.T.) with effect from May 3, 1997 and accordingly, as per his order held that the provision regarding restricted admissibility of the final product was eligible to the Modvat credit on furnace oil received by them with effect from March 1, 1999 to the fullest extent of duty actually paid on furnace oil by the manufacturer. Accordingly the claim was allowed.

It is thereafter, that an order u/s 35E(2) of the Act came to be passed by the Commissioner, Central Excise which is purported to be an order of review directing the assessing officer to file an appeal before the Commissioner (Appeals), Central Excise and Customs, Jaipur within stipulated period for determination in view of the observations made by the Commissioner for correctness or otherwise of the order passed by the adjudicating authority on August 31, 2001 allowing Modvat credit amounting to Rs. 32,052. The Commissioner (Appeals) vide order dated January 2, 2003 upheld the findings of the adjudicating authority and approved the order passed by it dated August 31, 2001. Accordingly, the Departmental appeals were dismissed. This order was challenged, by the Revenue before the Tribunal who as aforesaid, has also dismissed the appeal of the Revenue.

Mr. Ajay Shukla, learned counsel for the appellant contended that the Tribunal has erred in coming to the conclusion that the Modvat credit was correctly allowable, when there was specific finding by the Commissioner administration in exercise of the powers contained u/s 35E where he came to the conclusion that the burden of duty in respect of petroleum products cleared by the manufacturer M/s. BPCL prior to February 28, 1999 was passed on the customers only to the extent of ten per cent ad valorem and therefore, only to the extent of ten per cent. Modvat credit was allowable. He submits that substantial question of law arise out of the order of the Tribunal and needs consideration by this court.

We have considered the arguments advanced by the learned counsel for the appellant so also the material on record and the impugned order. In our view, the finding of the Tribunal is based on the finding of the fact and appreciation of evidence and no substantial question of law arises out of the order of the Tribunal. The facts are not in dispute that the Commissioner relied upon the notification which restricted Modvat credit to only ten per cent ad valorem, which stood expired on February 28, 1999, whereas while in the instant case the respondent-assessee availed of the Modvat credit on the goods after that period, i.e., during March, 1999 to May, 1999, therefore, the Modvat credit in the case in question, i.e., furnace oil used as inputs by the respondents had correctly been allowed by the adjudicating authority in its order dated August 31, 2001, further approved by the Commissioner (Appeals), so also the Tribunal and there is a concurrent finding of fact by all the three authorities, it is based on appreciation of evidence and no substantial question of law, can be said to arise out of the impugned order, we do not find any illegality or perversity in the impugned order passed by the Tribunal. Consequently, the D.B. Central excise appeal, being devoid of merit, is hereby dismissed.