2007 (8) TMI 176 - AT - Central Excise

Credit Assessable value revised by authority and reduced rebate claim Duty paid earlier by availing credit Credit cannot be denied as authority gave endorsement on sanction of rebate by approval of range jurisdictional authority, where entire consignment was exported

Summary

Issues:
1. Denial of Modvat credit based on reworked assessable value
2. Proper documentation for availing Modvat credit
3. Requirement of specific permission for re-crediting duty in Modvat account

Analysis:

Issue 1: Denial of Modvat credit based on reworked assessable value
The appellant, an export house, exported goods under the claim of rebate after paying excise duty on the higher assessable value inclusive of freight and insurance. The rebate sanctioning authority re-evaluated the assessable value, leading to a reduction in the duty amount by Rs. 12,52,059. The appellant, instead of appealing against this decision, took credit suo motu by entering the amount in their RG-23A Part-II and reflecting it in their monthly RG-12 Return. The appellate tribunal noted that the appellant's action amounted to self re-adjudication of the assessable value, but considering the endorsement by the Superintendent on the rebate sanctioning order, which implied approval from the jurisdictional Central Excise authorities, the tribunal allowed the credit as the duty paid in excess needed to be neutralized by re-crediting in the Modvat account.

Issue 2: Proper documentation for availing Modvat credit
The show cause notice proposed denial of the credit based on the argument that the endorsement by the rebate sanctioning authority was not a proper document under Rule 57G(3) for availing Modvat credit. The Commissioner (Appeals) upheld the denial, stating that the appellant should have obtained specific permission from the Department for re-crediting the duty. However, the tribunal observed that the Division Bench in previous cases had held that re-crediting entries in Modvat account did not require specific permission, and the denial was based on different procedural grounds than the original denial of credit.

Issue 3: Requirement of specific permission for re-crediting duty in Modvat account
The appellant argued that the Commissioner (Appeals) went beyond the show cause notice by denying credit based on the need for specific permission for re-crediting duty. The tribunal considered the peculiar circumstances of the case, including the endorsement by the Superintendent and the fact that the consignment was exported under rebate claim, and extended the benefit to the appellant. The tribunal set aside the impugned order and allowed the appeal with consequential relief, emphasizing that the denial of credit was based on procedural and technical aspects different from the grounds originally cited for denial.

In conclusion, the tribunal allowed the appeal, overturning the denial of Modvat credit and providing relief to the appellant based on the specific circumstances and endorsements indicating approval from the jurisdictional Central Excise authorities.