2006 (1) TMI 434 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit for fibre glass insulation and storage tank.
2. Denial of Modvat credit due to lack of duplicate invoice copy.

Analysis:
1. The appellants appealed against the denial of Modvat credit for fibre glass insulation and storage tank by the Commissioner (Appeals). The Commissioner concluded that these items did not bring about any change in the final product and were not integral parts of plant or machinery. The appellants argued that Modvat aims to prevent tax cascading and cited a previous Tribunal decision supporting their claim for Modvat credit on fibre glass insulation. They also relied on Tribunal decisions regarding Modvat on storage tanks. The learned SDR highlighted the restrictive provisions of Modvat at the relevant time. The Tribunal noted that the purpose of Modvat is to eliminate adverse tax effects and acknowledged the evolving nature of the system. It found that both items were used within the factory premises and played a role in the manufacturing process, thus allowing Modvat credit for them.

2. The appellants also contested the denial of Modvat credit amounting to Rs. 15,000 due to the absence of a duplicate invoice copy. The Tribunal referred to a previous decision where rubber stamping was deemed equivalent to marking, satisfying the requirements of the Central Excise Rules. It held that since there was no dispute about the duty paid nature of the inputs, the denial of Modvat credit based on the lack of a duplicate invoice copy was unjustified. The Tribunal set aside the lower authorities' orders and allowed the appeal, granting Modvat credit for the disputed items and the previously disallowed amount of Rs. 15,000.

In conclusion, the Tribunal ruled in favor of the appellants, allowing Modvat credit for the fibre glass insulation and storage tank while also permitting the disputed credit amount of Rs. 15,000. The judgment emphasized the purpose of Modvat in preventing tax cascading and ensuring a fair tax system, leading to a favorable decision for the appellants in both contested issues.