2004 (1) TMI 459 - AT - Central Excise

Summary

Issues: Availability of Modvat credit of Rs. 30,176 to the respondents.

In this case, the main issue revolves around the availability of Modvat credit amounting to Rs. 30,176 to the respondents. The appeal was filed by the Revenue against the order-in-appeal passed by the Commissioner (Appeals) concerning this matter. The dispute arises from the purchase of materials (MS waste and scrap) by the respondents through three invoices from M/s. Lalit Steel Corporation. The Department sought to deny the credit on the grounds that the original supplier, National Re-rollers and Fabricators, was not entitled to avail deemed credit for duty payment on the goods. However, there was no evidence to suggest that the said firm had faced any proceedings from the Department for this issue. The respondents had purchased the goods with duty paid documents, and the Department did not dispute the duty paid nature of the goods received and utilized by the respondents in their factory.

Moreover, the Tribunal noted that penalizing the respondents for the original supplier's alleged wrongful availment of deemed credit would be unjust, especially when the Department had not taken any action against the supplier. The Commissioner (Appeals) rightly allowed the credit to the respondents, considering the factual circumstances of the case. Consequently, the Tribunal upheld the impugned order, dismissing the Revenue's appeal. The decision was based on the principle that the respondents should not be penalized for the actions of the original supplier, especially when there was no evidence of any wrongdoing on their part.