2010 (11) TMI 280 - AT - Central Excise

Rebate - Modvat credit - Penalty - There is no corroborative evidence indicating that the maintenance of records by the appellant is not reflecting the correct position - it is seen that apart from using the said modvat credit for payment of duty, the appellants have also paid an amount of Rs. 66,533/- from the PLA account - It has to be held that the goods were processed by the appellants and cleared on payment of duty - The fact that the rebate claim documents filed by M/s. Avinash Exports have been found forged, cannot have any reflection on the appellants present case - The impugned order is accordingly set aside and appeal allowed with consequential relief to the appellants

Issues:
1. Admissibility of modvat credit for grey fabrics received.
2. Allegations of forged rebate claim documents.
3. Denial of modvat credit by Revenue.
4. Conflicting statements of involved parties.
5. Imposition of penalties and duty demand by authorities.

Issue 1: Admissibility of modvat credit for grey fabrics received:
The appellant, engaged in processing grey fabrics, received grey fabrics from a merchant manufacturer for processing. The Revenue alleged that the modvat credit availed by the appellant was not admissible as the grey fabrics were never received and processed. However, the appellant's director stated that they did receive the grey fabrics, processed them, and cleared the processed fabrics. The appellant also paid duty from their PLA account, indicating their sincerity. The Tribunal found in favor of the appellant, noting that the appellant processed and cleared the goods, reversing the deemed credit by paying duty.

Issue 2: Allegations of forged rebate claim documents:
Investigations revealed that the merchant manufacturer had filed rebate claims based on forged shipping bills, indicating no actual export of goods. The appellant's director clarified that they had received the grey fabrics, processed them, and transported the processed fabrics to the merchant manufacturer. The Tribunal held that the merchant manufacturer's actions did not affect the appellant's case, as the appellant had fulfilled their processing obligations.

Issue 3: Denial of modvat credit by Revenue:
The Revenue denied the modvat credit availed by the appellant, citing lack of manufacturing process at the appellant's premises. However, the Tribunal observed that the appellant had paid duty from their PLA account, demonstrating their compliance. The Tribunal found the Revenue's case lacking credibility and ruled in favor of the appellant, setting aside the demand for duty and penalties.

Issue 4: Conflicting statements of involved parties:
Conflicting statements were recorded from the merchant manufacturer and the appellant's director regarding the receipt and processing of grey fabrics. While the merchant manufacturer claimed no actual export or processing, the appellant's director affirmed receiving, processing, and clearing the fabrics. The Tribunal favored the appellant's version, considering the director's statements and the statutory records maintained by the appellant.

Issue 5: Imposition of penalties and duty demand by authorities:
The Assistant Commissioner had confirmed the demand for duty against the appellant, along with imposing penalties for alleged inadmissible modvat credit. The Commissioner (Appeals) upheld this decision, leading to the present appeals. However, the Tribunal, after considering the evidence and statements, set aside the duty demand and penalties, providing consequential relief to the appellants.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for duty and penalties imposed by the authorities. The decision was based on the appellant's compliance with processing and duty payment obligations, despite allegations of forged rebate claim documents by the merchant manufacturer. The conflicting statements were resolved in favor of the appellant, emphasizing the importance of statutory records and payment of duty from the PLA account.

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