2004 (3) TMI 265 - AT - Central Excise

Summary

Issues:
Appeal against deemed Modvat credit allowance based on invoices lacking proof of duty discharge.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding the allowance of deemed Modvat credit to the respondents based on invoices issued by specific manufacturers without proper proof of duty discharge. The Commissioner (Appeals) had reversed the order-in-original, allowing the credit, which was challenged by the Revenue. The adjudicating authority had allowed the credit for some invoices but disallowed it for others due to lack of proof of duty discharge. Specifically, the manufacturer M/s. Mahabir Steel Rolling Mills, operating under the Compounded Levy Scheme, had not discharged any duty, as evidenced by the invoices bearing a declaration only for future duty discharge under Rule 96ZP. The Commissioner (Appeals) erred in reversing the adjudicating authority's decision, as the notification required proof of duty discharge at the time of input receipt, not just a future obligation. The Tribunal found the Commissioner's reasoning flawed and reinstated the adjudicating authority's decision to disallow the credit for the relevant invoices.

The respondents contended in their submissions that they had acquired inputs from manufacturers governed by Section 3A for duty payment, and their invoices carried necessary declarations. However, the Tribunal found this claim factually incorrect based on the evidence presented. The respondents also cited a Punjab & Haryana High Court decision in Vikas Pipes v. CCE, which stated that no certificate was needed from the Range Officer for claiming deemed Modvat credit. The Tribunal clarified that the issue here was not about a lack of certificate but about the actual discharge of duty by the manufacturers at the time of sale. The High Court's decision did not apply in this case, where the manufacturers had not discharged the duty, and the invoices did not meet the notification requirements. Therefore, the Tribunal rejected the respondents' arguments and upheld the adjudicating authority's decision to disallow the credit for the relevant invoices.

In conclusion, the Appellate Tribunal CESTAT, New Delhi set aside the Commissioner (Appeals)'s order and restored the order-in-original of the adjudicating authority, thereby allowing the Revenue's appeal. The decision clarified the distinction between duty discharge and future duty liability declarations on invoices, emphasizing the importance of meeting notification requirements for claiming deemed Modvat credit.