2002 (4) TMI 179 - AT - Central Excise

Summary

Issues:
- Appeal filed by Revenue challenging Modvat credit allowed by Commissioner (Appeals)
- Interpretation of Notification No. 14/95-C.E. (N.T.) for Modvat credit eligibility
- Whether job worker is entitled to take Modvat credit
- Disallowance of Modvat credit due to lack of sale or stock transfer

Analysis:

1. Appeal filed by Revenue: The Department filed an appeal challenging the decision of the Commissioner (Appeals) who allowed Modvat credit. The Department contended that for Modvat credit on an invoice under Rule 57G, there should be a sale involved. In this case, as there was no sale or stock transfer, the job worker was deemed ineligible for Modvat credit. The Tribunal noted the absence of the Respondents during the hearing but proceeded with the case, ultimately dismissing the appeal.

2. Interpretation of Notification No. 14/95-C.E. (N.T.): The Tribunal analyzed Notification No. 14/95-C.E. (N.T.) to determine the eligibility criteria for Modvat credit. The Commissioner (Appeals) had allowed the credit based on compliance with all conditions except the lack of a sale transaction. However, the Tribunal referred to various decisions, including BPL Ltd. v. CCE and Modern Food Industries (India) Ltd., to establish that the term "sale" under Central Excise Act includes book adjustments in stock transfers. Relying on these precedents, the Tribunal held that the invoices in question fell within the definition of "sale" as per the notification, making them eligible for Modvat credit.

3. Job worker's entitlement to Modvat credit: The Tribunal reaffirmed the settled position that job workers are entitled to claim Modvat credit. It emphasized that compliance with conditions such as duty payment, proper accounting, and use in manufacturing dutiable products are crucial for availing Modvat credit. The Tribunal referenced case laws and previous decisions to support the job worker's entitlement to Modvat credit, ultimately setting aside the impugned order denying the credit.

4. Disallowance of Modvat credit: The Tribunal upheld the decision of the Commissioner (Appeals) who had properly analyzed the issue at hand and concluded that the job worker was eligible for Modvat credit. By referring to relevant case laws and interpretations of the term "sale" under the Central Excise Act, the Tribunal found that the invoices in question met the criteria for Modvat credit eligibility. Consequently, the appeal filed by the Revenue was dismissed, and the decision allowing Modvat credit to the job worker was upheld.