1993 (11) TMI 159 - AT - Central Excise

Summary

Issues:
- Appeal against rejection of Modvat Credit on duty paid inputs based on certificates issued by a Public Sector Undertaking.

Analysis:
1. The appeals involved the rejection of Modvat Credit on duty paid inputs by the authorities due to the non-acceptance of certificates issued by a Public Sector Undertaking, Hindustan Copper Ltd., as evidence of payment of excise duty. The main contention was whether the certificates issued by Hindustan Copper Ltd. were acceptable under Rule 57G(2) of the Central Excise Rules, 1944.

2. The appellants manufactured bare Copper Wires using duty paid inputs received from Hindustan Copper Ltd. The authorities rejected the Modvat Credit claim citing the absence of circular/instruction by the Central Board of Excise and Customs regarding the acceptance of certificates issued by Hindustan Copper Ltd. The appellants argued that the certificates were issued in compliance with a Circular by CBEC under Rule 57G(2) and should have been accepted by the authorities.

3. The consultant for the appellants highlighted that the certificates and challans issued by Hindustan Copper Ltd. evidenced the payment of duty, but the authorities did not accept them. The consultant argued that the denial of Modvat credit based on technicalities when the payment of duty and utilization of inputs were not in doubt was unjust. Reference was made to previous judgments emphasizing that procedural lapses should not be a reason to deny credit if the receipt and utilization of duty paid goods were established.

4. The respondent, represented by the SDR, contended that Rule 57G(2) mandated the acceptance of inputs under specific documents like Gate Pass or AR 1 for claiming credit. The absence of a directive from CBEC regarding the acceptance of certificates from Hindustan Copper Ltd. justified the rejection of Modvat Credit by the lower authorities.

5. The Tribunal, after considering the submissions, referred to a clarification by CBEC stating that certificates issued by Public Sector Undertakings should be treated as duty paying documents for availing credit under Rule 57A. As Hindustan Copper Ltd. was a Public Sector Undertaking and the clarification was not disputed by the department, the Tribunal set aside the lower authorities' orders and allowed the appeals, granting consequential relief to the appellant in accordance with the law.