2002 (12) TMI 610 - AT - Central Excise

Summary

Issues involved:
- Whether the Appellant No. 1 rightly took Modvat credit of duty paid on inputs supplied by Appellant No. 2.

Analysis:

Issue 1: Modvat Credit Claim by Appellant No. 1
- Submission by Shri B.L. Narsimhan: Appellant No. 1, a manufacturer of Cold Rolled Strips, availed Modvat Credit under Rule 57A for H.R. Coils purchased from Appellant No. 2 and others. The practice in the Steel Industry involved price negotiation post-clearance, with price adjustments made through debit/credit notes. Appellant No. 1 claimed Modvat Credit based on duty payment indicated in invoices, with no reassessment by Appellant No. 2 for price reductions.

- Legal Position: Advocate argued that once duty is paid on goods, it remains attached regardless of subsequent price changes. Citing precedents, it was contended that only authorities over the manufacturer's jurisdiction can adjust duty. Reference was made to various decisions highlighting the impermissibility of reassessing goods at the hands of the buyer.

Issue 2: Response by Appellant No. 2
- Submission by Ms. Reena Khair: Appellant No. 2 contended that there was no evidence of intentional overpayment to facilitate Modvat Credit for Appellant No. 1. The duty was paid based on Depot selling prices, not earmarked for Appellant No. 1. Reference was made to a Board's Circular clarifying assessment procedures post-amendment.

- Commercial Aspect: Appellant No. 2 argued that there was no commercial accommodation, as goods were purchased at prevailing market prices, which could fluctuate due to the volatile ferrous metal market. Duty payment was made through PLA, indicating no accommodation.

Issue 3: Revenue's Counter-Arguments
- Submission by Shri Rajeev Tondon: Revenue argued that despite subsequent price corrections, Modvat Credit adjustments were not made. Claiming commercial accommodation, Revenue cited decisions emphasizing the need for refund claims for excess duty paid.

Judgment and Conclusion:
- The Tribunal acknowledged that Appellant No. 2 cleared goods with duty paid, and Appellant No. 1 availed Modvat Credit based on actual duty paid. Notably, excess duty paid due to price finalization was not refunded by Appellant No. 2. Precedents were cited to establish that the authority over the input manufacturer must address any duty discrepancies. The Tribunal set aside the demand, emphasizing that Appellant No. 1 was entitled to credit based on duty paying documents. The decision highlighted the inapplicability of reassessment at the buyer's end and upheld the Modvat Credit claim by Appellant No. 1, ultimately allowing both appeals.