1997 (5) TMI 131 - AT - Central Excise

Summary

Issues:
Entitlement to Modvat credit on inputs under the Modvat scheme based on duty paying documents.

Analysis:
The case involved a dispute regarding the entitlement of the appellants to Modvat credit on inputs under the Modvat scheme. The appellants were engaged in the manufacture of various steel products and were receiving wire rods as inputs under GP1 showing nil rate of duty. The Department alleged that since the duty payment was not shown against the relevant column of gate passes, the appellants were not entitled to the Modvat credit. A show-cause notice was issued, questioning the Modvat credit of Rs. 8,81,0654/- taken by the appellants. The appellants argued that they had original gate passes showing duty payment by the re-rollers and were thus entitled to the credit. The Dy. Collector disallowed the credit, which was upheld by the ld. Collector (Appeals), leading to the appeal before the Tribunal.

The appellants contended that they had produced the GP1 under which duty was paid on wire rods/bars, even though the GP1 issued in their name did not show the duty payment. They argued that as the goods were duty paid and evidence of payment was available, they were entitled to the Modvat credit. The Tribunal noted that the appellants had received the original GP1 showing duty payment in addition to the GP1 issued in their name, and the supplier had permission to receive duty paid goods in their factory under Rule 173H. Citing a previous Tribunal judgment in Rathi Alloys & Steel Ltd., the Tribunal emphasized the importance of Rule 173H in allowing manufacturers to receive reprocessed duty paid goods without further duty payment. The Tribunal held that the appellants were entitled to the credit based on the documents produced by them.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, following the precedent set by the previous Tribunal judgment. The Tribunal directed that the appellants must provide original duty-paying documents to ensure proper verification and compliance with the Modvat scheme. The decision highlighted the significance of Rule 173H and the necessity of proper documentation for availing Modvat credit on inputs.