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2011 (9) TMI 858 - AT - Central ExciseReversal of credit - Inputs destroyed by fire - Availemt of MODVAT Credit - Held that - Adjudicating Authority has referred to the amended provision of Rule 3(5B) and Rule 3(5C) of Cenvat Credit Rules, 2004, which require an assessee to pay back the amount of Cenvat Credit in case of destruction of inputs in fire or where the inputs are written off. Admittedly the said provisions were introduced w.e.f. 11-5-2007 and 7-9-2007, whereas the fire broke in the appellant s factory on 7-5-2007. As such, the said relied upon provisions were not available on the date of fire and destruction of the inputs. In such a scenario, the law declared by the Larger Bench in the case of Grasim Industries v. CCE, Indore (2006 (8) TMI 69 - CESTAT,NEW DELHI) would be fully applicable to the facts of the case - Stay granted.
Issues: Dispute over availed Modvat credit on inputs destroyed in a fire in the factory.
Analysis: The judgment by the Appellate Tribunal CESTAT NEW DELHI dealt with the issue of whether the appellant was required to reverse the Modvat credit availed on inputs destroyed in a fire that occurred in their factory. The Adjudicating Authority referred to the amended provisions of Rule 3(5B) and Rule 3(5C) of the Cenvat Credit Rules, 2004, which mandate the repayment of Cenvat Credit in case of input destruction due to fire or write-off. These provisions were introduced on 11-5-2007 and 7-9-2007, after the fire incident on 7-5-2007. The Adjudicating Authority observed that the Tribunal's previous judgments did not apply as they were made before the incorporation of these rules. However, the Tribunal found that the provisions were not available at the time of the fire incident, making the earlier Larger Bench decision in the case of Grasim Industries v. CCE, Indore applicable. Therefore, the Tribunal disagreed with the Commissioner's view that the Tribunal judgments would not be relevant in this case. The Tribunal, based on the above analysis, decided to dispense with the pre-deposit condition of duty and penalty and allowed the stay petition unconditionally. This decision was made after considering the timing of the fire incident in relation to the introduction of the relevant rules and the applicability of the earlier Tribunal decision. The judgment provides clarity on the issue of reversing Modvat credit in cases of input destruction due to fire and emphasizes the importance of considering the timing of rule amendments in such situations.
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