2005 (8) TMI 496 - AT - Central Excise

Summary

Issues: Modvat credit on Capital Goods denied due to removal to job worker and delay in receipt.

Analysis:
The appeal in question stemmed from the denial of Modvat credit on Capital Goods by the Commissioner of Central Excise (Appeals) on the basis that the goods were removed to a job worker and received back after a delay of 3 years. The appellants had cleared the Capital Goods to the job worker without paying duty, which led to duty payment on 24-12-1997 upon initiation of proceedings. The goods were received back on 12-1-1998, and Modvat credit was claimed on 24-4-1998. The denial of credit was primarily based on the argument that the duty payment made through TR 6 Challan was not a valid duty paying document. The department considered the clearance to the job worker three years ago under Rule 57S of CE Rules, which was challenged in the appeal.

The Tribunal referred to previous judgments to support the appellant's case. In the case of Beta Nepthol Pvt. Ltd. v. CCE, the Tribunal deemed payment under TR 6 Challans sufficient for Modvat credit. Similarly, in Krebs Bio-Chemicals Ltd. v. CCE, the Tribunal considered the date of duty payment on Capital Goods as crucial for granting Modvat credit. These precedents were found relevant to the current case, contrasting the Commissioner's reliance on Amtek Auto Ltd. v. CCE, where improper removal of Capital Goods to a sister unit led to penalty imposition. The Tribunal differentiated the facts of the present case from Amtek Auto Ltd., emphasizing the significance of the duty payment date. As the duty was paid on 24-12-1997 and credit claimed within four months, meeting legal requirements, the Tribunal upheld the Modvat credit availment on Capital Goods, setting aside the impugned order and allowing the appeal with consequential relief.

The judgment highlights the importance of adherence to legal provisions and previous case law in determining Modvat credit eligibility on Capital Goods, emphasizing the significance of duty payment dates and compliance with statutory requirements.