2006 (4) TMI 426 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 58/97-C.E. regarding availment of deemed Modvat credit.

Analysis:
The judgment involves a dispute regarding the availment of deemed Modvat credit under Notification No. 58/97-C.E. due to a difference of opinion between two Single Members. The notification declares that duty shall be deemed paid on specified inputs, allowing credit to manufacturers of final products. The crux of the issue is whether the receiver of re-rolled products can avail deemed credit when the supplier's invoices mention 'duty liability discharged under Rule 96ZP'.

The Tribunal in the case of Delhi Steel Industries emphasized that the substantive provisions of deemed Modvat credit in the notification override the declaration-related condition in Para 4. It stated that any denial of deemed credit based on absence of declaration by input-manufacturers contradicts the government's declaration in Para 2. The Tribunal highlighted that the condition in Para 4 is insignificant in light of the government's declaration in Para 2, supporting the allowance of deemed Modvat credit.

Conversely, the Tribunal in the case of Punia Engineering Co. held that if invoices do not explicitly state that duty liability has been discharged, deemed Modvat credit should be disallowed. The judgment highlighted a discrepancy between the expressions 'duty has been discharged' in the notification and 'duty to be discharged' on supplier invoices, leading to the denial of deemed credit.

Upon interpreting paragraph 4 of Notification No. 58/97, the Tribunal found no specific wording mandate for invoices. It was noted that Section 3A of the Central Excise Act does not restrict the availment of deemed Modvat credit, only requiring payment based on production capacity. The Tribunal emphasized that re-rolling mills must discharge duty liability as per Rule 96ZP, with provisions for recovery if delinquent. It concluded that denying Modvat credit based on absence of duty discharge indication on invoices contradicts the statutory provisions, upholding the view in Delhi Steel Industries as correct.

In conclusion, the judgment clarifies the interpretation of Notification No. 58/97-C.E. regarding deemed Modvat credit, emphasizing the significance of substantive provisions over declaration-related conditions and ensuring consistency in applying the provisions for the benefit of the assessee.