2005 (5) TMI 511 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on consignment of unbranded Kiwan received from another unit at Noida under duty paid invoices.

Analysis:
In the present case, the issue pertains to the denial of full Modvat credit on the consignment of unbranded Kiwan received by the respondents from their unit at Noida under duty paid invoices. The appellants had availed credit on the actual duty paid goods received by them, which was at a rate of 24% ad valorem. The revenue contended that the duty paid was in excess of what was actually payable under the First Schedule appended to CETA, and thus, the credit could not be availed of more than that by the respondents. However, the tribunal held that the revenue's stand was not justiciable under the law and was not rightly accepted by the Commissioner (Appeals). It was noted that at the time of clearance of the goods by the Noida unit, BED was paid at the rate of 24% ad valorem, and the respondents had availed the credit. Even if it was assumed that the duty payable was only at the rate of 16%, the revenue could not legally debar the respondents from taking the credit at the rate at which the duty was actually discharged. The tribunal emphasized that the revenue had accepted the duty as paid at the time of clearance and had not refunded the excess duty to the Noida unit of the respondents. Therefore, the tribunal concluded that the respondents were entitled to claim the credit on the actual paid amount of duty, upholding the impugned order and dismissing the appeal of the revenue.

This judgment highlights the importance of adhering to the actual duty paid amount in availing credit and emphasizes that the revenue cannot enrich itself by retaining excess duty and restricting credit claims. The tribunal's decision underscores the principle that under the law, taxpayers are entitled to claim credit based on the actual amount of duty paid, irrespective of any discrepancies in the duty payable calculations. The ruling provides clarity on the entitlement of taxpayers to avail credits in accordance with the duty amounts actually discharged, ensuring fairness and adherence to legal provisions in such matters.