2010 (10) TMI 206 - HC - Central Excise

Modvat credit - Appellant submitted that bill of entry was assessed on the basis of invoice value and not on the basis of weight - Discrepancy in the invoice of foreign supplier and in the bill of entry about the weight was on account of an obvious clerical error and had no bearing on the Modvat credit taken on the basis of duty actually paid - This aspect was not appreciated by the Adjudica-ting Authority - Thus, substantial question of law as to perversity of finding recorded by the authorities arises and has to be answered in favour of appellant - Remand the matter to the Adjudicating Authority for a fresh decision

Summary

Issues involved:
Appeal under section 35G of the Central Excise Act against the Final Order passed by the Tribunal regarding Modvat credit availed on imported goods, discrepancy in weight in the bill of entry and invoice, substantial questions of law on the admissibility of Modvat Credit and the role of the Adjudicating Authority in such cases.

Analysis:

1. Modvat Credit Discrepancy Issue:
The appellant imported goods for manufacturing their final products and paid custom duty based on the invoice value. The Department alleged illegal availment of Modvat Credit due to a discrepancy in the weight mentioned in the bill of entry and the invoice. The Tribunal upheld the demand, stating that the party failed to prove the correct quantity received and that no amendment to the bill of entries was made. The substantial question of law raised was whether the Adjudicating Authority can consider discrepancies in the bill of entry for Modvat Credit without amending the bill of entry.

2. Legal Arguments and Decision:
The appellant argued that the discrepancy in weight was a clerical error and did not affect the Modvat credit taken based on the duty paid. The duty was duly paid, and there was no dispute about the value of goods. The High Court agreed with the appellant, noting that the weight discrepancy was due to a clerical error and was not appreciated by the Adjudicating Authority. The Court found a perversity in the authorities' findings and ruled in favor of the appellant.

3. Judgment and Remand:
The High Court allowed the appeal, set aside the impugned order, and remanded the matter to the Adjudicating Authority for a fresh decision in accordance with the law. The appellant was directed to appear before the Adjudicating Authority for further proceedings on a specified date.

This detailed analysis of the judgment highlights the key issues, legal arguments, and the court's decision regarding the Modvat credit discrepancy and the role of the Adjudicating Authority in such cases.