1996 (2) TMI 294 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit based on nil duty gate passes for reprocessed goods under Rule 173H.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolved around the admissibility of Modvat credit to the manufacturer-appellants based on gate passes showing nil duty for reprocessed goods under Rule 173H. The impugned order was passed solely on the ground that the gate passes for the inputs received indicated nil duty. The appellant's representative, Shri Rajesh Chibber, relied on Trade Notice No. 89/89, dated 3-11-89, issued by the Bombay-I Collectorate, which outlined procedures for clearances of goods under nil duty gate passes related to reprocessed goods under Rule 173H. He presented a certificate from the Superintendent of the jurisdictional Range, detailing the original and new gate pass numbers, duty paid amounts, and recipient information for the reprocessed goods. The appellant argued that their case aligned with the provisions of the trade notice, emphasizing the factual details in the certificate.

The Departmental Representative, Shri D.S. Mallick, supported the impugned order, expressing concerns about revenue risks if Modvat credit was granted based on the certificate and nil duty gate pass. However, the Tribunal highlighted that denying Modvat credit would nullify the facility provided under Rule 173H, allowing manufacturers to receive reprocessed duty-paid goods without further duty payment after reprocessing. The Tribunal referenced the trade notice, which clarified the process for granting credit for inputs returned under Rule 173H, emphasizing the importance of cross-referencing original duty-paying documents on nil duty gate passes for Modvat credit eligibility.

The Tribunal acknowledged that the certificate from the Superintendent of Central Excise, along with the provisions of Rule 173H and the trade notice, supported granting Modvat benefit to the appellants. However, to ensure compliance and prevent misuse of duty-paying documents for credit availing purposes, the Tribunal directed the appellants to provide the original duty-paying documents for verification and necessary actions. Ultimately, the appeal was allowed under the condition that the appellants adhere to the specified terms regarding documentation and credit utilization for reprocessed inputs only.