2007 (8) TMI 741 - HC - Central Excise

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against order of Customs, Excise and Service Tax Appellate Tribunal regarding entitlement to deemed credit under Notification No. 58/97-C.E. when input suppliers did not pay Central Excise duty and provided incorrect certificates on invoices.

Analysis:
The case involved an appeal filed by the Revenue challenging an order passed by the Tribunal regarding the entitlement to deemed credit under Notification No. 58/97-C.E. The appellant-Revenue contended that the manufacturer of final products may not be entitled to deemed credit if the manufacturer-supplier of inputs did not pay Central Excise duty and provided inaccurate certificates on invoices. The assessee, engaged in manufacturing various products falling under the Central Excise Tariff Act, availed deemed credit under Rule 57A(6) of the Central Excise Rules against specified inputs. The suppliers of inputs were alleged to have not discharged full duty liability, leading to a show cause notice for recovery of deemed Modvat credit. The adjudicating authority disallowed the deemed credit, ordered recovery, and imposed a penalty, while allowing a partial Modvat credit to the assessee.

On appeal, the Commissioner (Appeals) set aside the Order-in-Original, leading the Revenue to approach the Tribunal. The Tribunal dismissed the appeal, emphasizing the requirement of a specific declaration on invoices for availing Modvat credit. The Tribunal noted that the denial of Modvat credit was due to the absence of a declaration that the appropriate duty of Excise had been paid on the inputs. However, the Commissioner (Appeals) found that the invoices bore a declaration regarding duty liability under Rule 96ZP(3), which was deemed sufficient for claiming Modvat credit as per Notification No. 58/97-C.E.

Upon thorough consideration of submissions and orders, the High Court declined to accept the Revenue's contention. The Court observed that the invoices in question contained a declaration regarding duty liability to be discharged under Rule 96ZP(3), which was deemed adequate for claiming Modvat credit. The Court, based on the established findings and legal position, concluded that no substantial question of law necessitating the admission of the appeals existed. Consequently, the appeal was dismissed, affirming the Tribunal's decision and upholding the entitlement to deemed credit based on the declarations provided on the invoices.