2012 (6) TMI 394 - AT - Central Excise

Demand imposed due to denial of excess/ wrong credit of duty paid on inputs - assessee requested for allowing short credit availed by appellant which stands denied by Commissioner - appellant engaged in manufacture of computers - Held that - Adjudicating authority has picked up those cases where the appellants have availed wrong/excess credit but he has ignored those instances where appellants have availed short credit. By verifying the entire documents for the purpose of MODVAT credit, it amounts to opening of the entire assessment, in which case, the appellants would be entitled to take short availed credit by them. As such, we set aside the impugned orders and remand the matter to the adjudicating authority for fresh verification of the documents and allow the appellants to avail the short taken credit, if otherwise available to them.

Issues:
1. Availment of CENVAT credit on computers falling under Heading 84.71 of the Schedule to the Central Excise Act, 1985.
2. Dispute regarding the quantum of credit availed by the appellants.
3. Consideration of short availed credit by the Commissioner.
4. Time limit for availment of credit under MODVAT Rules.
5. Remand for fresh verification of documents and allowance of short taken credit.
6. Examination of entitlement of MODVAT credit based on photocopies.
7. Decision on the issue of penalty.

Analysis:

1. The appellants were engaged in manufacturing computers falling under a specific heading of the Central Excise Act, 1985. Computers were initially exempted from duty but duty was later imposed. The appellants became entitled to avail CENVAT credit of duty paid on inputs/raw materials.

2. The dispute revolved around the quantum of credit availed by the appellants. The advocate argued that credit was based on various documents, but Revenue found instances of excess credit, short credit, and invalid credit. The Commissioner denied excess/wrongly availed credit, leading to the present appeal.

3. The advocate contended that the Commissioner should have considered short availed credit along with excess availed credit. He argued that there is no time limit for credit availment under MODVAT Rules and that the appellants should be allowed to avail short taken credit.

4. The Revenue acknowledged the absence of a time limit for credit availment but stated that short availed credit was not part of the present proceedings. The appellants were within their rights to avail credit based on the documents available.

5. The Tribunal found that the Commissioner had ignored instances of short availed credit while focusing on excess credit. The matter was remanded for fresh verification of documents to allow the appellants to avail short taken credit if available.

6. The Tribunal directed the Commissioner to examine the appellants' plea for entitlement of MODVAT credit based on photocopies of invoices in light of relevant decisions. The appellants were permitted to present these decisions before the adjudicating authority.

7. Although no penalty was imposed due to mistakes in availing credit, the issue of penalty was left for the Commissioner to decide considering the lack of malafide intention and errors arising from the examination of extensive documentary evidence.

This detailed analysis of the judgment highlights the key issues, arguments presented by both sides, and the Tribunal's decision to remand the matter for further verification and consideration of short availed credit.

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