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2005 (2) TMI 689 - AT - Central Excise
Issues:
1. Modvat credit disallowed on the ground of receiving lesser quantity than invoiced. Analysis: The judgment by the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding the Modvat credit claimed by the appellant for furnace oil received from M/s. IOC Ltd. The appellant had taken the duty paid on the furnace oil as Modvat credit. However, part of this credit was disallowed by the impugned order due to the appellant allegedly receiving a lesser quantity than invoiced. The basis for this disallowance was the "temperature variation allowance" provided by M/s. IOC Ltd. The Revenue contended that the temperature variation allowance was actually a way to adjust for the lower quantity supplied. In contrast, the appellant argued that they only claimed Modvat credit equivalent to the duty paid on each consignment, not accounting for any allowances like the temperature variation allowance. They demonstrated through invoices that the allowance was a fixed percentage of the gross value, including excise duty, but they did not seek any refund of excise duty based on this allowance. The appellant's position was supported by the Modvat Rules, which allowed credit equal to the duty paid on the consignment. They also cited a precedent from the Tribunal to emphasize that deductions from the invoice price to the buyer should not affect the credit available as long as these deductions are not considered for assessing the goods' value. The Tribunal found the temperature allowance irrelevant for determining the credit entitlement since it was not factored into the central excise duty calculation. Consequently, the Tribunal rejected the Revenue's appeal, ruling in favor of the appellant. In conclusion, the judgment clarified the application of Modvat credit rules in the context of allowances like the temperature variation allowance, emphasizing that such allowances should not impact the credit entitlement if they are not considered in the assessment of duty paid on the goods.
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