2007 (5) TMI 495 - AT - Central Excise

Cenvat/Modvat credit - inputs - non-receipt of inputs - Held that - There is no contrary evidence to the appellant s claim that they converted input received as indicated in the duty paying documents, but denial of Modvat/Cenvat credit to the appellant on the ground that they have not received the input along with the duty paying documents. There is also no evidence as to any flow back of money from dealer to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Modvat credit to the appellant company.
2. Setting aside of penalty on the appellant by Commissioner (Appeals).

Analysis:
1. The appellant company appealed against the denial of Modvat credit to them, while the Revenue appealed against the setting aside of the penalty on the appellant by the Commissioner (Appeals). The appellant had availed Modvat credit based on duty paying documents received from registered dealers. The show cause notice alleged that the appellant had not received the inputs as indicated in the documents. The adjudicating authority confirmed the demand and imposed a penalty, which was challenged by the appellant. The Commissioner (Appeals) upheld the demand but set aside the penalty as duty had been paid before the notice. Both the appellant and the Revenue challenged parts of this order.

2. Upon reviewing the submissions and records, it was found that the duty paying documents clearly showed that the registered dealer had supplied "MS scrap" to the appellant. The statement of the dealer's proprietor confirmed this supply chain. The appellant had purchased scrap from various dealers, paid for it, used it in manufacturing finished goods, and paid duty upon clearance. The law dictates that when inputs are received and consumed in the factory premises, Modvat/Cenvat credit cannot be denied. An earlier case precedent was cited where it was held that if goods were received under duty-paying invoices, credit could not be denied. The Tribunal found no evidence to deny credit to the appellant, especially since there was no proof of any financial flow back from the dealer to the appellant.

3. In light of the facts and legal precedents, the Tribunal allowed the appeal of the assessee, granting consequential relief, and rejected the Revenue's appeal. The question of limitation was deemed unnecessary to address as the appeal was allowed on its merits. The decision was made in line with established legal principles and previous judgments of the Tribunal.

This comprehensive analysis of the judgment highlights the issues, arguments, evidence, legal principles, and the final decision rendered by the Appellate Tribunal CESTAT, Ahmedabad.