2002 (4) TMI 751 - AT - Central Excise

Summary

Issues:
1. Availment of Modvat credit without valid duty paying documents.
2. Rejection of Modvat credit appeal by Commissioner (Appeals).
3. Admissibility of Modvat credit under Rule 57G.

Issue 1: Availment of Modvat credit without valid duty paying documents
The appellants, manufacturing white cement, availed Modvat credit of Rs. 1,39,239 in March 1994 on furnace oil from Indian Oil Corporation, Kandla. Central Excise Authorities noted that the goods were not received under the valid duty paying document, Central Excise Gate Pass (GP-1) as required by Rule 57G and Rule 52A of Central Excise Rules, 1944. Consequently, proceedings were initiated against them. The Deputy Commissioner disallowed the Modvat credit, citing contravention of Rule 57G, and imposed a penalty of Rs. 50,000 under Rule 173Q(1)(bb).

Issue 2: Rejection of Modvat credit appeal by Commissioner (Appeals)
The party's appeal against the disallowance of Modvat credit was rejected by the Commissioner (Appeals). It was noted that the Modvat credit had been previously rejected by the Assistant Commissioner in 1995, and no appeal was filed against that decision. Despite this, the party later availed the same credit under Rule 57G, which was deemed untenable by the Commissioner (Appeals) due to the lack of appeal against the initial rejection.

Issue 3: Admissibility of Modvat credit under Rule 57G
During the hearing, the appellants argued that they were entitled to the Modvat credit under Rule 57G based on the challan/certificate issued by Indian Oil Corporation, as per Notification No. 16/94-C.E. (N.T.). They contended that even though their earlier claim under Rule 57H(1) was rejected, they believed they were eligible under Rule 57G. The Tribunal found that the appellants' claim under Rule 57H(1) should have been considered under Rule 57G if deemed inadmissible. Consequently, the Tribunal set aside the previous order, remanding the matter to the original authority for reevaluation under Rule 57G, granting the appellants a fair hearing.

In conclusion, the Tribunal allowed the appeal by remanding the case for further examination under Rule 57G to determine the admissibility of the Modvat credit, emphasizing the importance of following proper procedures and ensuring the appellants' right to a fair assessment of their claim.