1997 (5) TMI 297 - AT - Central Excise

Summary

Issues: Appeal against denial of Modvat credit on various grounds including lack of permission under Rule 57F(2), availing credit on xerox copies, processing and manufacturing loss, and incorrect recording of inputs.

In this case, the Department appealed against the Order-in-Appeal that modified the denial of Modvat credit by the Assistant Commissioner. The grounds for denial included lack of permission under Rule 57F(2), availing credit on xerox copies, processing and manufacturing loss, and incorrect recording of inputs. The Commissioner (Appeals) addressed each issue separately.

Regarding the denial of credit due to lack of permission under Rule 57F(2), the Commissioner held that it was a procedural lapse and should not result in the denial of substantive benefit. The Commissioner allowed the respondents to rectify the mistake before any action was initiated against them. The Department argued that the permission was a legal requirement and the credit should not be allowed without it. However, the Tribunal cited previous decisions stating that non-compliance with Rule 57F(2) does not automatically result in the denial of Modvat credit.

On the issue of availing credit on xerox copies, the appellate authority disallowed the credit as it should be based on original documents showing duty payment. Since no appeal was filed against this part of the order, it was not considered by the Tribunal.

Regarding the availing of credit on processing and manufacturing loss, the Commissioner remanded the matter to ascertain the percentage of loss and decide on the credit based on the submitted documents.

Concerning the incorrect recording of inputs, the Commissioner accepted that it was a clerical error and allowed the Modvat benefit after verification by the Assistant Commissioner.

The Tribunal found no illegality in the Commissioner's order, citing previous decisions that non-compliance with Rule 57F(2) does not automatically lead to the denial of Modvat credit. Therefore, the Department's appeal was rejected, upholding the Commissioner's decision to allow the Modvat credit despite the lack of permission under Rule 57F(2).