2002 (11) TMI 164 - AT - Central Excise

Summary

Issues involved: Eligibility for Modvat credit under DEPB scheme based on CVD payments reflected in Bill of Entries.

Summary:
The appeal questioned the eligibility of the assessee for Modvat credit of Rs. 2,43,901/- on CVD paid under DEPB pass book, as noted in two Bills of entry dated 24-8-98. The Assistant Commissioner observed irregular Modvat credit availed by the appellant, leading to the dispute. The appellant argued that as long as the Bill of Entry reflects the payment, they are entitled to Modvat credit, even if payment was debited in the pass book and not made in cash. The Revenue contended that CVD must be paid in cash to avail credit.

The consultant argued that Modvat credit should not be denied as the DEPB scheme allows for credit debits equivalent to cash payments, supported by Rule 57A and 57G. The consultant highlighted that the Bill of Entry is a specified document reflecting CVD debit, making the Modvat credit valid. The Revenue's strict interpretation was opposed, stating that DEPB scheme debits are akin to cash payments, thus entitling the appellant to Modvat credit.

Upon review, it was found that the Bill of Entry endorsed the CVD payment under DEPB scheme, satisfying the requirements of Rule 57G. The Tribunal emphasized that the purpose of Modvat credit is to prevent cascading effects, thus any form of CVD payment, whether cash or debit entries, should allow for credit. The Revenue's technical stance was dismissed, and the appeal was allowed, setting aside the impugned order for Modvat credit eligibility under the DEPB scheme.