2006 (4) TMI 393 - AT - Central Excise

Summary

Issues:
Appeal against denial of modvat credit due to natural calamity damage.

Analysis:
The appeal challenged an order denying modvat credit to the appellants for inputs destroyed by a natural calamity. The factory was waterlogged due to a flood, causing damage to many inputs. A show cause notice was issued for recovery of the Cenvat credit attributable to the damaged inputs. The appellants argued that the inputs were for manufacturing purposes and got damaged at the manufacturing area. However, both the adjudicating authority and the Commissioner (Appeals) rejected this argument, leading to the current appeal.

The Senior Advocate for the appellants highlighted that the inputs were in the manufacturing bay, a fact not disputed by the Department. He relied on a previous Tribunal decision upheld by the Supreme Court to support the appellants' case. On the other hand, the Department argued that there was no evidence showing the inputs were issued and used in manufacturing. The Department contended that no records were produced to demonstrate the issue of inputs to the manufacturing area.

Upon reviewing the submissions and records, the Tribunal noted that the damaged inputs were in the manufacturing bay but were not put to use for manufacturing, as observed by the adjudicating authority. The Commissioner (Appeals) upheld this finding without alteration, confirming that the inputs were issued for manufacturing purposes. Referring to a previous Tribunal decision upheld by the Supreme Court, the Tribunal found that the issue in the current case was similar and covered by the precedent. Therefore, the Tribunal allowed the appeal, setting aside the order in appeal and providing consequential relief to the appellants.

In conclusion, the Tribunal's decision was based on the interpretation of whether the damaged inputs were actually used in manufacturing, as required for claiming modvat credit. The Tribunal relied on precedents and factual findings to support its decision to allow the appeal and provide relief to the appellants.