2002 (9) TMI 744 - AT - Central Excise

Summary

Issues:
- Admissibility of Modvat credit on inputs cleared under Rule 52A invoices issued by the manufacturer.
- Interpretation of Rule 57F and Rule 57A in relation to Modvat credit eligibility.
- Applicability of Board's Circular No. 282/116/96-CX.
- Time-bar issue regarding the claim of Modvat credit.

Analysis:
- The appellants were involved in the manufacture of excisable goods and had cleared inputs to another company under Rule 52A invoices for the manufacture of VHF tuners. The inputs were later returned, and the appellants sought re-credit of duty on the returned inputs. The department alleged a contravention of Rule 57G and sought to disallow the credit under Rule 57I.
- The jurisdictional Asstt. Commissioner upheld the department's demand, stating that the appellants' own invoices were not valid duty-paying documents for Modvat credit under Rule 57G(2). The Commissioner (Appeals) also rejected the appeal.
- The consultant for the appellants argued that Rule 57F did not prohibit availing Modvat credit based on invoices issued by the manufacturer. They relied on Board's Circular No. 282/116/96-CX, which allowed credit when goods were returned under the same invoice.
- The JDR contended that the circular did not apply to inputs cleared by the same manufacturer. However, the judge found this argument inconsistent with Rule 57F, which allowed manufacturers to clear inputs as if they were the manufacturer.
- The judge held that the appellants were eligible for the credit as they had cleared inputs under Rule 52A as manufacturers and later took credit as manufacturers of VHF tuners. The Board's clarification supported this position and was binding on departmental authorities.
- Additionally, the judge addressed the time-bar issue raised by the JDR, noting that it was not a basis for denying the Modvat credit claim. Consequently, the judge allowed the appeal, ruling in favor of the appellants' admissibility of the Modvat credit.