2016 (11) TMI 349 - AT - Central Excise

Modvat credit - iron ore fines - job work - Rule 57F(4) of Central Excise Rules, 1944 - Held that - the appellant specifically stated before the lower authorities that they had taken the recredit of amounts reversed by them when they dispatched iron ore fines on receipt of iron ore pellets. Revenue has not contested those submissions made by appellant before them. Once it is established that iron ore pellets are received back from the jobworker, nothing survives in these appeals and the recredit availed by the appellant is correct - the appellant having reversed the CENVAT credit and then subsequently taken recredit on receipt of iron ore pellets is within the provisions of Rule 57F(4) of the Central Excise Rules, 1944 - Modvat credit rightly availed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the Modvat credit availed on Iron Ore fines by the appellant during August 1999 is required to be reversed or not.

Analysis:

Issue 1: Modvat Credit Reversal
The primary issue in this case revolved around the question of whether the Modvat credit availed by the appellant on Iron Ore fines needed to be reversed. The appellant had dispatched the iron ore fines to a jobworker for conversion into iron ore pellets, debiting an amount of 10% of the Modvat credit availed. The jobworker converted the fines into pellets and paid duty on the pellets. The Revenue contended that since the appellant did not receive back the iron ore fines, they were liable to reverse the 10% credit. However, upon examination, it was found that the appellant followed the prescribed procedure under Rule 57F of the Central Excise Rules, 1944 for conversion. The jobworker returned the iron ore fines in the form of pellets, which were consumed by the appellant. The appellant had not availed credit on the duty paid by the jobworker. The Tribunal held that the appellant was entitled to recredit the amount reversed when dispatching the fines upon receiving the pellets back. The appellant's actions were deemed to be within the provisions of Rule 57F(4), and the impugned order was set aside, allowing the appeal with consequential relief.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's reasoning behind the decision, ensuring a thorough understanding of the case.