2011 (6) TMI 164 - HC - Central Excise

Modvat credit - job works - whether; if excise duty is levied on an assessee at place A and Modvat credit is sought to be availed of at place B it is open to the Authorities at place B to deny credit on the ground that no duty was payable at place A - t the assessment is allowed to be final it would not be legal and proper to allow the Revenue to raise the question on the basis of Modvat credit. Indeed now the payment of excise duty must be treated as valid therefore the claim of Modvat credit must be treated as excise duty validly paid.

Summary

Issues: Whether excise duty paid at one place allows for Modvat credit to be claimed at another place, and whether the Revenue can deny Modvat credit based on duty payment location.

Analysis:
1. Issue of Modvat Credit and Duty Payment Location: The central issue in this judgment revolves around the availability of Modvat credit when excise duty is paid at one location and credit is sought at another. The Court examined whether the Revenue can deny Modvat credit on the grounds that duty was not payable at the location where the goods were initially subject to excise duty.

2. Framing of the Question: The Court re-framed the question to address the core concern of whether the denial of Modvat credit by the Revenue based on the location of duty payment is valid. The cases involved job works undertaken outside Goa where excise duty was paid, and the subsequent claim for Modvat credit in Goa was contested by the Revenue.

3. Precedent and Tribunal Decision: The judgment referred to a previous decision by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Owens Bilt Ltd. Vs. Commissioner of Central Excise, Pune. The CEGAT judgment influenced the decision in the present case, leading to the dismissal of the Revenue's appeal.

4. Legal Arguments and Conclusion: The Assistant Solicitor General argued that Modvat credit can only be claimed if duty was validly collected at an earlier stage. However, the Court noted that the Revenue did not challenge the duty applicability at the initial location, and the assessments had become final. Consequently, the Court held that it was not permissible for the Revenue to contest the Modvat credit claim in the subsequent location based on the duty payment location.

5. Final Decision: Ultimately, the Court concluded that since the assessments were finalized and the excise duty was treated as valid, the claim for Modvat credit must also be considered as excise duty validly paid. Therefore, the appeals were dismissed, and no costs were awarded.

This judgment clarifies the principles governing the availability of Modvat credit in cases where excise duty is paid at one location and credit is sought at another, emphasizing the importance of finality in assessments and the validity of duty payment for claiming credit.