1998 (2) TMI 261 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit by the Commissioner (Appeals) based on the rate of duty mentioned in the challans and denial of deemed Modvat credit eligibility to the appellants.

The judgment pertains to an appeal filed by the appellants against the disallowance of Modvat credit by the Commissioner (Appeals) on the grounds that the deemed credit cannot be claimed at a later stage. The appellants, engaged in manufacturing re-rolling materials, obtained raw materials from a supplier, M/s. Rashtariya Ispat Nigam Ltd. (RIN), based on challans indicating duty paid at Rs. 1,000/- per MT. The Assistant Commissioner issued a show cause notice stating the correct duty rate was Rs. 920/- per MT, limiting the credit to Rs. 920/- per MT. The Commissioner (Appeals) upheld this decision, disallowing even the deemed Modvat credit claimed by the appellants.

The appellants argued that the duty rate discrepancy in the challans was a mistake, as the duty was paid at Rs. 920/- per MT but mentioned as Rs. 1,000/- per MT in the challans. They contended that the department accepted these challans as duty paying documents, making the Modvat credit admissible. Additionally, they claimed entitlement to deemed Modvat credit under the Govt. of India Order. The respondent, represented by the DR, argued that the appellants did not fulfill the conditions for deemed Modvat credit eligibility, supporting the lower authorities' decision.

Upon review, the judge analyzed the documents and found them acceptable as duty paying documents during the material period. The judge noted that Govt. of India instructions accepted challans from Public Sector Undertakings as duty paying documents. As the documents were genuine and acceptable, Modvat credit based on these documents was permissible. However, the judge clarified that the credit should be restricted to the actual duty rate paid, which was Rs. 920/- per MT, not the erroneously mentioned Rs. 1,000/- per MT. Consequently, the judge allowed Modvat credit at the correct rate of Rs. 920/- per MT, rendering the question of deemed Modvat credit inapplicable in this scenario.

In conclusion, the judge set aside the impugned order disallowing the Modvat credit and allowed the appeal in favor of the appellants. The judgment focused on the correct determination of Modvat credit eligibility based on the duty rate paid, emphasizing the importance of accurate documentation and adherence to prescribed rates for credit allowance.