2006 (2) TMI 550 - AT - Central Excise

Summary

Issues:
1. Eligibility for Modvat credit regarding inputs received from manufacturers under compounded levy scheme.
2. Validity of invoices issued by suppliers and declaration required under Notification.
3. Availability of deemed credit under Notification No. 58/97 to recipients of inputs from units under compounded levy scheme.

Analysis:
1. The appeals challenged the Order of the Commissioner (Appeals) regarding the eligibility of the respondent assessees for Modvat credit for inputs received from manufacturers under the compounded levy scheme. The Commissioner relied on a High Court order in a similar case. The Department proposed to appeal to the Supreme Court as the High Court order had not attained finality. The invoices from suppliers lacked the required declaration under the Notification. The learned counsel for the respondents argued that the suppliers were discharging duty liability under Section 3A, supported by a certificate from the jurisdictional Superintendent. The contention was that deemed credit under Notification No. 58/97 should be available to recipients from units under the compounded levy scheme.

2. The submissions highlighted the absence of specific declarations on the invoices regarding duty payment under Section 3A. The counsel argued that despite some dispute over duty amounts, the suppliers were indeed discharging duty under the compounded levy scheme. The appeals emphasized the differences in the declarations on the invoices compared to the case law relied upon by the Commissioner (Appeals). The judgment agreed with the assessees, stating that deemed credit was available to buyers of materials from units under the compounded levy scheme as per Notification No. 58/97. Since there was no dispute that the suppliers were working under the compounded levy scheme, the appeals lacked merit. The buyers were not required to prove the correct duty payment by the manufacturers under the compounded levy scheme.

3. The judgment concluded that the revenue did not dispute the payment of duty under the compounded levy scheme by the manufacturer suppliers. It affirmed that buyers of inputs from units under the compounded levy scheme were entitled to deemed credit under Notification No. 58/97. As there was no challenge to the duty payment under the scheme, the appeals were deemed to lack substance and were rejected.