2007 (8) TMI 245 - HC - Central Excise

Assessee did not follow the procedure; and took full credit of CVD more than one month before the last part of consignment of the said bill of the entry - violation of provisions of Rules 57A 57F and 57G - questions framed in the Reference Application do not arise in the facts and circumstances of the case. The lapse on the part of the Firm was inadvertent and it was not so great as to deprive them of their substantive right of Modvat credit - Application is disposed of in favour of the Firm

Summary

Issues:
1. Eligibility for availment of modvat credit before receipt of entire quantity of inputs.
2. Absolution from offense by issuing a warning.

Eligibility for availment of modvat credit before receipt of entire quantity of inputs:
The case involved M/s. Indica Chemicals Industries (P) Ltd. Kotdwar, which manufactured 'Expanded Pertile Ore' and paid additional duty of custom. The firm was accused of not following the procedure and taking full credit of CVD more than one month before the last part of the consignment, violating provisions of Rules 57A, 57F, and 57G. The Assistant Commissioner of Central Excise ordered recovery of the amount and imposed a penalty. The Commissioner (Appeals) rejected the firm's appeal, leading to an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal, which allowed the firm's appeal. The High Court, after reviewing the case and the tribunal's order, found the firm's lapse to be inadvertent and not severe enough to deprive them of their substantive right to Modvat credit. Consequently, the High Court disposed of the Reference Application in favor of the firm and against the Revenue.

Absolution from offense by issuing a warning:
The Tribunal had raised questions regarding the party's eligibility for modvat credit and whether issuing a warning absolved the party from the offense, despite admitting to the occurrence. The High Court, after considering the facts and the tribunal's order, concluded that the questions framed in the Reference Application did not apply to the case's circumstances. The High Court determined that the firm's lapse was not significant enough to warrant depriving them of their Modvat credit rights. Therefore, the High Court disposed of the Reference Application in favor of the firm and against the Revenue, indicating that the firm could not be absolved of the offense by a mere warning.