2010 (4) TMI 629 - HC - Central Excise

Cenvat/modvat credit on the inputs - As the respondent assessee had already received the modvat credit, therefore, the Department in tended to deny the credit and to recover the credit already taken by the manufacturer Held that - duty was yet to be paid by him, and then the Department was free to proceed for recovery of the duty against the manufacturer.

Summary

Issues:
1. Interpretation of exemption Notification conditions for modvat credit eligibility.

Analysis:
The High Court considered a case where the Revenue challenged an order passed by the Customs, Excise & Gold (Control) Appellate Tribunal regarding the entitlement of a respondent to claim modvat credit on inputs as per a certificate issued by the Central Excise Range Officer. The Department contended that the respondent, despite only partially discharging duty liability, had taken modvat credit on inputs, which they sought to deny and recover. The key issue raised was whether an exemption Notification's conditions must be fulfilled before allowing the benefit to the assessee.

The Court examined the facts and noted that the manufacturer had availed modvat credit on all inputs used, even though some duty remained unpaid. The Department's argument was that full duty payment was a prerequisite for claiming modvat credit. However, both the Commissioner (Appeals) and the Tribunal had ruled in favor of the respondent, emphasizing that if any duty was outstanding, the Department could recover it separately from the manufacturer. Consequently, the Court upheld the decisions of the lower authorities, dismissing the Revenue's appeal and ruling in favor of the assessee.

In conclusion, the judgment clarified that the benefit of an exemption Notification dependent on specific conditions could still be granted to the assessee even if all conditions for deemed credit were not fully met. The Court affirmed that the manufacturer's entitlement to modvat credit on inputs was valid, and any pending duty could be separately recovered by the Department, thereby rejecting the Revenue's challenge and upholding the decisions of the Commissioner (Appeals) and the Tribunal.