2003 (10) TMI 570 - AT - Central Excise

Summary

Issues: Availability of Modvat credit on rejected goods

In this appeal before the Appellate Tribunal CESTAT, New Delhi, the issue revolves around the availability of Modvat credit of a disputed amount to the appellants on rejected goods. The appellants had initially imported certain inputs, paid the requisite duty, and claimed Modvat credit. Subsequently, they considered re-exporting part of the consignment due to defects, reversed the Modvat credit proportionately, but did not actually re-export the goods. The main contention was whether the appellants were entitled to re-credit the amount they had previously reversed.

The Tribunal noted that the facts were not in dispute regarding the non-re-export of the inputs. The appellants argued that they had brought back the allegedly defective inputs to the factory and used them in manufacturing final products, justifying their claim for re-credit. The adjudicating authority had disallowed the re-credit primarily on procedural grounds, stating that the proper procedure under Central Excise Rules was not followed. However, the Commissioner (Appeals) rejected the claim based on the lack of evidence proving the receipt of goods back in the factory after the failed re-export attempt. This discrepancy between the two orders raised concerns about a miscarriage of justice.

The Tribunal found merit in the appellants' argument and directed a re-examination by the adjudicating authority. It emphasized the need to consider the defense presented by the appellants and the documents submitted to support their claim for re-credit. Additionally, the Tribunal highlighted the relevance of a Board's Circular dated 30-12-1996, which should be taken into account during the fresh decision-making process. Ultimately, the impugned order of the Commissioner (Appeals) was set aside, and the case was remanded to the adjudicating authority for a fresh decision, thereby allowing the appeal.