1997 (9) TMI 645 - AT - Central Excise

Summary

Issues:
Dispensation of pre-deposit of demanded amounts in stock transfer case for Modvat credit denial.

Analysis:
The judgment concerns an application seeking dispensation of pre-deposit of demanded amounts totaling Rs. 4,44,562.80 in a stock transfer case involving Modvat credit denial. The central issue is whether Modvat credit can be denied when goods are transferred between units of a multi-unit organization through book adjustment without a sales invoice. The appellant argued that a previous tribunal decision supports their case. The tribunal analyzed the situation, emphasizing the definition of sale under Section 2(h) of the Central Excises and Salt Act, 1944. It held that book adjustment constitutes a form of payment and that the goods were indeed intended for sale to sister units, contrary to the lower authority's finding.

The tribunal noted the beneficent nature of the Modvat scheme, aiming to eliminate duty cascading. It considered the documentation requirements under rule 57G to ensure duty payment and Modvat credit eligibility. Emphasizing the definition of sale, the tribunal concluded that book adjustment suffices to establish a sale transaction in a multi-unit organization scenario. Consequently, the tribunal allowed the appellant's plea for pre-deposit dispensation, finding merit in their case based on the cited tribunal decision and the applicable legal provisions.

The appellant, a multi-unit organization, transfers components between units, subject to duty, for stock transfer. The tribunal highlighted the need to determine if a sale occurred through book transfer under section 2(h). Consequently, the tribunal set aside the lower authority's order and remanded the matter for fresh consideration. The original authority was directed to reevaluate the case, considering the tribunal's observations and allowing the appellants to present necessary evidence. Ultimately, the appeals were allowed by remand, indicating a favorable outcome for the appellants in securing Modvat credit benefits in the stock transfer scenario.