2005 (9) TMI 534 - AT - Central Excise

Summary

Issues:
1. Availment of Modvat credit on inputs supplied by M/s. EUAL.
2. Validity of invoices issued by M/s. EUAL for Modvat credit.

Analysis:
1. The respondents were involved in manufacturing wet grinders for M/s. Elgi Ultra Appliances Ltd. (EUAL) on a job work basis. They availed Modvat credit on duty paid inputs supplied by EUAL under Rule 57GG of the Central Excise Rules, 1944. The department issued a notice to disallow this credit taken during June 1995 to February 1996. The original and appellate authorities found the credit lawfully availed, leading to the Revenue's appeals.

2. The main contention raised was the validity of invoices issued by EUAL for availing Modvat credit. The argument was that these invoices did not involve a sale of goods, thus making them invalid for credit. The respondents cited Final Order Nos. 568 & 569/2005 in the case of CCE v. Precious Equipments (P) Ltd., where a similar issue was decided in favor of the respondents.

3. Referring to the Precious Equipments case, where Modvat credit was allowed for inputs supplied by principal manufacturers without sale, the Tribunal upheld the credit availed by the respondents. The Tribunal emphasized that the transfer of inputs to job workers constituted a sale under the Central Excise Act, making the invoices valid for Modvat credit. Following this precedent, the Tribunal upheld the impugned order and dismissed the Revenue's appeals.

4. The judgment was pronounced on September 13, 2005, confirming the respondents' right to avail Modvat credit on inputs supplied by EUAL under Rule 57G of the Central Excise Rules, 1944. The decision aligned with the interpretation that such transfers of inputs to job workers constitute a sale, allowing for the valid availment of Modvat credit.