2016 (9) TMI 1133 - AT - Central Excise

Modvat credit - necessary entries relating to aluminium shots used in the manufacture of steel were not made in RG-23A Part-I, since at the material time, the appellants were not aware as to whether deemed credit on the said goods were admissible - instead of taking the credit at the time when appellant received the goods, they took the credit at a later period - Held that - by respectfully following the decision of the Hon ble High Court of Allahabad in the case of CCE Vs. Ramswarup Electricals Ltd. 2007 (5) TMI 116 - HIGH COURT , ALLAHABAD which was taken by relying on the decision of Hon ble Apex Court in the case of Collector Vs. Raghuvar (India) Ltd. 2000 (5) TMI 40 - SUPREME COURT OF INDIA , we hold that the deemed Modvat Credit is admissible. - Decided in favour of appellant

Summary

Issues:
- Alleged wrongful availment of Modvat Credit on exempted goods
- Denial of Modvat Credit in respect of Aluminium shots used in the manufacture of steel products
- Interpretation of relevant notifications and circulars regarding deemed credit
- Onus of proof on Department to establish goods are not duty paid
- Application of Section 11B of the Act in Modvat credit cases

Analysis:
1. The appellant purchased Aluminium Shots, Cube, and Stars for manufacturing steel without making necessary entries in RG-23A Part-I initially. The Department alleged wrongful availment of Modvat Credit on exempted goods and imposed penalties. The appellant argued that deemed credit was in line with the Modvat Credit Scheme, and there was no time limit for credit availment during the relevant period. They cited previous decisions supporting their case and emphasized the Department's onus to prove non-duty paid status of goods.

2. The Tribunal examined the Notification No. 182/84-CE and related circulars to determine the admissibility of deemed credit. The appellant's delayed credit claim for Aluminium shots was justified based on the provisions of the notification and subsequent modifications. The Department's contention was refuted by referring to relevant case laws and clarifications regarding Modvat credit facilities for specific materials.

3. The Tribunal considered the High Court's judgment in a similar case, where the court ruled in favor of the assessee regarding the applicability of Section 11B of the Act in Modvat credit matters. Following this precedent, the Tribunal held that the deemed Modvat Credit was admissible in the appellant's case. The appeal was allowed, granting consequential relief to the appellant.

4. In conclusion, the Tribunal's decision on 23/09/2016 favored the appellant, emphasizing the admissibility of deemed Modvat Credit and overturning the Department's denial of credit for Aluminium shots. The judgment highlighted the importance of interpreting relevant notifications, circulars, and legal precedents in Modvat credit cases to ensure fair treatment and adherence to statutory provisions.