2004 (5) TMI 209 - AT - Central Excise

Summary

Issues involved: Eligibility to take Modvat credit of duty paid on the strength of T.R. 6 Challan.

Analysis:
1. The appellant, a chewing tobacco manufacturer, captively consumed unbranded chewing tobacco without duty payment until it became chargeable to Central Excise duty from 1-3-1994. Exemption for captively consumed unbranded chewing tobacco was withdrawn from 20-5-1994 to 10-8-1994. The appellant paid duty under T.R. 6 Challan during this period and claimed Modvat credit based on it.

2. The appellant argued that T.R. 6 Challan was the relevant duty-paying document for Modvat credit, as invoices were issued only at the final product clearance stage. They cited a previous Tribunal order supporting their claim and relied on relevant case laws.

3. The Revenue contended that Rule 57G of Central Excise Rules specifies documents for Modvat credit, emphasizing compliance with prescribed rules. They referred to a Tribunal decision stating that adherence to prescribed rules is mandatory for availing Modvat credit.

4. The Tribunal noted that the appellants became liable to pay duty on unbranded chewing tobacco during the specified period, which they paid via T.R. 6 Challan. As no other document evidenced duty payment, T.R. 6 Challan was the only basis for Modvat credit. The Tribunal distinguished the cited case law, holding that T.R. 6 Challan sufficed as a duty-paying document. Consequently, the impugned order disallowing Modvat credit was set aside, and the appeal was allowed.