2011 (2) TMI 813 - AT - Central Excise

Modvat credit - Inputs send to Job work - Department s allegation is that the respondent, after sending of the modvated inputs to job workers for processing after debit of an amount to equal to 10% of their value, have taken recredit of that amount, even though there is no evidence regarding return of the processed inputs - Since the stock register of goods sent for processing/job-working (Annexure IV) had been prescribed by the Board s Circular No. 265/99/96-CX dated 12/11/96, if the entries in the register show the receipt back of the inputs from the job-workers, within the stipulated period, the recredit of the amount equal to 10% of the value of the inputs/semi-processed inputs has to be allowed - But there should be no doubt about the genuineness of the entries in Annexure IV register regarding the receipt of the inputs - The impugned orders-in-appeal are, therefore, set aside and the matters are remanded to CCE (Appeals) for denovo decision after examining the Department s objections to permitting Modvat credit.

Summary

Issues:
Modvat credit demands on inputs sent for processing, recredit without evidence of return, discrepancies in records, compliance with Central Excise Rules, jurisdiction of Assistant Commissioner.

Detailed Analysis:

1. Modvat Credit Demands on Inputs Sent for Processing:
The case involved disputes regarding Modvat credit on inputs sent to job workers for processing. The Department alleged that the respondent had taken recredit of the debited amount without evidence of return of processed inputs. The Assistant Commissioner confirmed demands based on Rule 57F(6) and Rule 57F(11) of the Central Excise Rules. The Commissioner (Appeals) set aside some demands, leading to the Revenue's appeals.

2. Recredit Without Evidence of Return:
The Department argued that recredit of duty could only be allowed when processed inputs were received back in full, as per Rule 57F(7) and 57F(9). The absence of entries in RG-23A Pt. I register was highlighted, questioning the return of inputs. The CCE (Appeals) was criticized for not addressing discrepancies in records and not considering the absence of monthly abstract submission as required by Rule 57G(7).

3. Discrepancies in Records:
The Department raised concerns about discrepancies in records, such as the absence of entries in the RG-23A Pt. I register and the non-submission of the monthly abstract of Annexure IV register. The argument emphasized the importance of accurate record-keeping for Modvat credit transactions.

4. Compliance with Central Excise Rules:
The Tribunal noted the importance of compliance with Central Excise Rules, especially in maintaining accurate records like Annexure IV register. The decision highlighted the need for genuine entries in the register to support claims for recredit of duty on processed inputs sent to job workers.

5. Jurisdiction of Assistant Commissioner:
The Assistant Commissioner's role in calculating the actual credit attributable to inputs and adjusting the differential amount was emphasized. The Tribunal highlighted the need for proper assessment and concurrence in demanding Modvat credit based on Central Excise Rules.

In conclusion, the Tribunal set aside the impugned orders-in-appeal and remanded the matters for a de novo decision to address the Department's objections and ensure compliance with the Central Excise Rules. The detailed analysis focused on the discrepancies in records, compliance with rules, and the jurisdiction of the Assistant Commissioner in determining Modvat credit demands on inputs sent for processing.