2007 (4) TMI 404 - AT - Central Excise

Summary

Issues involved: Whether respondents are entitled to Modvat credit of duty paid on imported goods which are short received in their factory.

The short issue involved in the present appeal of Revenue pertains to the entitlement of respondents to Modvat credit of duty paid on imported goods which are short received in their factory. The Commissioner (Appeals) allowed the assessee's claim citing the negligible nature of the alleged shortages in input quantities, attributing them to inherent errors in measurement methods. The Commissioner also noted the absence of deliberate actions or mala fide intentions on the part of the appellant. Referring to relevant rules and precedents, the Commissioner concluded that ordering recovery of proportionate Cenvat credit for such shortages would not be just and proper. Consequently, the demand for Cenvat credit was set aside, leading to the dismissal of the demand for interest under Section 11AB and the penalty imposed on the appellant.

The learned DR for Revenue relied on a previous Tribunal decision in the respondent's case, where it was held that the importer is entitled to take credit only for the quantity actually received in the factory, not the quantity manifested in the import document. However, the appellant's representative highlighted that the aforementioned Tribunal decision had been rectified subsequently, allowing credit for shortages less than 2%. Reference was made to various orders by the Tribunal in the appellant's case, including those in favor of allowing credit for shortages. Additionally, a subsequent order by the Jt. Commissioner confirmed the acceptance of the Tribunal's decision in the appellant's case by the Department. Given the settled nature of the issue in favor of the respondent by previous Tribunal decisions, the Revenue's appeal was rejected.