1995 (9) TMI 162 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit based on certificates from Public Sector Undertakings.

Analysis:
The case involved six appeals filed by the appellants against the denial of Modvat credit based on certificates issued by Public Sector Undertakings, namely Hindustan Copper Ltd. and Hindustan Zinc Ltd. The appellants were engaged in manufacturing copper and zinc products and availed Modvat credit on inputs like copper wire bars and zinc ingots. The Department contended that Modvat credit could not be taken without specific prescribed documents under Rule 57G(2) of the Central Excise Rules. Additionally, Trade Notice No. 93/89 stated that only certificates from SAIL/TISCO for indigenous inputs were acceptable for Modvat credit, not from other Public Sector Undertakings. A show cause notice was issued, and the demand for denying Modvat credit was confirmed by the Assistant Collector and the Collector (Appeals).

The appellants argued that the Central Board of Excise and Customs had clarified in a letter that certificates from Public Sector Undertakings could be treated as duty paying documents. They contended that since the CBEC had not modified this clarification, certificates from Hindustan Copper Ltd. and Hindustan Zinc Ltd. should be accepted for Modvat credit. The appellants relied on a judgment in a similar case to support their argument. On the other hand, the Department maintained that Trade Notice No. 93/89 clearly prohibited Modvat credit based on certificates from these specific Public Sector Undertakings, modifying previous permissions granted under Trade Notice No. 68/89.

The Tribunal analyzed the evidence and legal provisions, noting that under Rule 57G, only the CBEC could specify documents as duty paying. The Tribunal found that the Trade Notice issued by the Central Excise Collectorate Bombay-I did not indicate CBEC's authority to prescribe duty paying documents. As the Department failed to produce evidence supporting the Trade Notice's legal basis, the Tribunal questioned the validity of the prohibition. Referring to a CBEC letter clarifying the acceptance of certificates from PSUs as duty paying documents, the Tribunal concluded that certificates from Hindustan Copper Ltd. and Hindustan Zinc Ltd., being PSUs, were valid for Modvat credit. Citing a relevant case law and considering the circumstances, the Tribunal set aside the denial of Modvat credit and allowed the appeals.