2005 (4) TMI 374 - AT - Central Excise

Summary

Issues:
- Jurisdictional challenge to the order passed by the Commissioner (Appeals) under Section 35E(4) of the Central Excise Act.
- Entitlement of the appellant to take Modvat credit of duty paid on the input by the input-supplier.

Jurisdictional Challenge:
The appeals were against a common order passed by the Commissioner (Appeals) allowing five departmental appeals. The appellants manufactured coated fabrics and availed Cenvat credit on inputs. The dispute arose when the department sought to disallow credits taken by the appellants during the period in question. The jurisdictional Commissioner reviewed the original authority's orders under Section 35E(2) of the Central Excise Act, leading to appeals filed with the Commissioner (Appeals) under Section 35E(4), which were treated as appeals of the Revenue and allowed by the Commissioner (Appeals). The appellants challenged the jurisdiction of the Commissioner (Appeals) under Section 35E(4), arguing that the appropriate remedy for the department was only under Section 35 of the Act. The Tribunal overruled this objection, finding no reason to consider the order as lacking jurisdiction.

Entitlement to Modvat Credit:
Regarding the merits of the case, the appellant contended they were entitled to take Modvat credit of duty paid on the input by the input-supplier, irrespective of the manner of payment. Conversely, the department argued that the appellant could only take credit for duty paid by the supplier and passed on to them. The Tribunal observed that the input-supplier had paid part of the duty on the input through deemed credit, which was not passed on to the appellants. As the appellants were not entitled to the benefit of the Notification allowing deemed credit, allowing them to avail credit of this duty would essentially grant them the benefit of the Notification, contrary to the purpose of the Modvat scheme. Therefore, the Tribunal held that the appellants were not entitled to avail the credit in question.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeals. The decision was based on the finding that the appellants were not entitled to the Modvat credit in question due to the nature of the duty payment by the input-supplier and the inapplicability of the deemed credit benefit to the appellants.