2010 (2) TMI 554 - HC - Central Excise

Cenvat credit credit disallowed as it is claimed 6 months after the date of bill of entry appellant claimed credit within a period of 6 months from the date when the metal scrap reached the factory premises of the Held that - Tribunal was not justified in denying MODVAT credit when the claim had been made within six months of the material reaching the factory premises.

Summary

Issues:
- Whether the Appellate Tribunal was justified in denying MODVAT credit to the appellant?

Analysis:
- The appellant, a manufacturer of iron and steel products, imported metal scrap through Kandla Port and filed a Bill of Entry for clearance on 12-1-1996, paying the duty on 20-1-1996. The appellant received different quantities of metal scrap on 21-8-1996 and 7-11-1996, after clearance. The MODVAT credit was claimed on 21-8-1996 and 7-11-1996. The Tribunal disallowed the credit, which was allowed by the Commissioner but overturned by the Tribunal, leading to the current appeal.

- The appellant argued that the MODVAT credit was claimed promptly upon the material reaching the factory premises, within 6 months, citing the need for goods to be received in the factory before claiming credit. The appellant relied on a precedent to support their claim. On the other hand, the Revenue contended that since the MODVAT credit was claimed after 6 months from the date of duty payment, it was not allowable under relevant rules.

- The Court noted that the goods reached the factory premises within the required timeframe, with no fault on the appellant's part in getting the goods cleared after paying duty. The Court emphasized that no loss was incurred by the Revenue as the full duty was paid, justifying the MODVAT credit claim. The Court also highlighted a previous instance where similar credit was allowed despite a delay in goods reaching the premises, without any appeal from the Revenue.

- Ultimately, the Court held that the Tribunal erred in denying the MODVAT credit, as the claim was made within the stipulated 6-month period from the material reaching the factory. The Court ruled in favor of the appellant, setting aside the Tribunal's order and upholding the Commissioner's decision to allow the MODVAT credit. Consequently, the appeal was allowed in favor of the appellant.