2006 (12) TMI 370 - AT - Central Excise

Summary

Issues involved: Denial of Modvat credit on "Shrink Sleeves" due to classification discrepancy and duty payment status.

In this case, the issue revolved around the denial of Modvat credit to the appellants for "Shrink Sleeves" purchased from a supplier. The dispute arose because the supplier classified the product under chapter sub-heading No. 3920.19 and paid duty, while the authorities contended that the product should be classified under chapter sub-heading No. 4901.90 with a 'nil' rate of duty. The denial of Modvat credit was based on the argument that if the supplier's product is not liable for duty payment, then the credit is not available to the appellants.

The appellant's advocate argued that the classification of "Shrink Sleeves" had been settled in a previous Tribunal case and emphasized that once the duty liability was discharged by the supplier, the recipient should not be disadvantaged. On the other hand, the Senior Departmental Representative (SDR) supported the findings of the Commissioner who had denied the Modvat credit.

After considering the submissions and examining the records, the Tribunal found that the issue was similar to a previous case where the Tribunal had ruled in favor of the appellants. The Tribunal noted that the product "Shrink Sleeves" should be classified under chapter sub-heading 3920.19 and be chargeable to duty, which meant that the appellants were entitled to Modvat/Cenvat credit for the duty paid by the supplier. Therefore, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any.

This judgment clarified the classification and duty payment status of "Shrink Sleeves" and affirmed the appellants' right to claim Modvat credit based on the correct classification and duty payment by the supplier.