2018 (7) TMI 419 - AT - Central Excise

MODVAT credit - scope of remand order - Revenue neutrality - whether the de novo order has been passed as per the direction of this Hon ble Tribunal regarding availability of Modvat credit during the disputed period, or not? - Held that - The respondent assessee had produced the relevant records which substantiate beyond the doubt that modvat credit is available to them. Therefore whatever demand had been raised would be set off against the available Modvat credit. The benefit of modvat credit is available to the respondent assessee against demand raised against them in the aforesaid period and therefore, whole exercise will be Revenue neutral. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Availability of Modvat credit during the disputed period.
2. Compliance with Modvat rules for availing the benefit.
3. Revenue neutrality and its impact on raising demands.
4. Adjudication authority's jurisdiction within the scope of the remand order.

Issue 1: Availability of Modvat credit during the disputed period:
The appeal was filed by the Revenue against an order remanded by the Tribunal to re-determine duty liability by considering duty credit on inputs used and duty paid on goods. The respondent had availed benefits under specific notifications, and the Commissioner dropped the demand after verifying Modvat Credit availability. The Revenue contended that Modvat benefit required certain conditions to be fulfilled, citing relevant case laws. However, the respondent demonstrated sufficient evidence of Modvat credit availability, leading to the dismissal of the Revenue's appeal.

Issue 2: Compliance with Modvat rules for availing the benefit:
The Revenue argued that the appellant did not file the necessary declaration under Modvat Credit Rule, hindering the grant of benefits. The Tribunal referenced a case emphasizing that revenue neutrality should not bar fulfilling all Modvat scheme conditions. The respondent's advocate maintained that the adjudication was per the remand order, focusing on verifying Modvat credit availability, supported by relevant case laws.

Issue 3: Revenue neutrality and its impact on raising demands:
The Revenue stressed that revenue neutrality should not preclude tax payment, highlighting that the availability of credit is subject to specific conditions. In contrast, the respondent relied on cases asserting that in revenue-neutral situations, no demand should be raised. The Tribunal noted the dismissal of the Revenue's appeal by the Supreme Court, affirming the availability of Modvat credit and the revenue-neutral nature of the exercise.

Issue 4: Adjudication authority's jurisdiction within the scope of the remand order:
The Tribunal reviewed the appeal records to determine if the de novo order aligned with the Tribunal's direction on Modvat credit availability. The Adjudicating authority confirmed the availability of Modvat credit based on the evidence provided by the respondent. Despite the Department's appeal and reference to a previous case, the Tribunal upheld the adjudicating authority's decision, emphasizing the revenue-neutral outcome and dismissing the Department's appeal.

In conclusion, the judgment upheld the availability of Modvat credit for the respondent, emphasizing compliance with Modvat rules, revenue neutrality, and the adjudicating authority's jurisdiction within the remand order's scope. The decision was based on thorough examination of evidence, case laws, and the dismissal of the Revenue's appeal by the Supreme Court, leading to the dismissal of the Department's appeal.