2001 (5) TMI 689 - AT - Central Excise

Appeal granted, case remanded for new decision on Modvat credit denial due to procedural irregularities.

The Tribunal allowed the appeal, remanding the case for a fresh decision. It held that the denial of Modvat credit for Light Diesel Oil based on ... Modvat - Capital goods Issues:1. Disallowance of Modvat credit for Light Diesel Oil claimed by the appellants.2. Procedural irregularity in availing credit before filing a declaration under Rule 57H.3. Denial of Modvat credit by the Assistant Commissioner based on lack of evidence of inputs in stock.Analysis:1. The authorities disallowed Modvat credit of Rs. 2,89,412.00 claimed by the appellants for Light Diesel Oil under Rule 57H. The appellants had stock of the inputs on 28-2-1994 and applied for credit on 20-1-1995. The Revenue objected, stating the credit was already availed on 31-12-1994. The appellants argued that any procedural irregularity in availing credit did not result in revenue loss, as they could reverse the entry if needed. They referred to a tribunal decision supporting their position. The Assistant Commissioner rejected their application citing lack of evidence of inputs in stock.2. The learned Consultant for the appellants argued that although taking credit before the Assistant Commissioner's permission under Rule 57H was a contravention, it should not deny the credit benefit. Citing a tribunal decision, they emphasized that the reversal and retaking of credit were revenue neutral. They also highlighted that specific permission of the Assistant Commissioner was not required under Rule 57H(b)(i). The Tribunal applied the precedent cited by the appellants and held that denial of credit solely on this ground was not justified. The matter was remanded for a fresh decision, allowing the appellants to present evidence of inputs in stock.3. The Tribunal observed that the procedural irregularity of taking credit before permission did not warrant denial of the benefit. Citing a relevant tribunal decision, the Tribunal emphasized that the reversal and retaking of credit were revenue neutral. The Tribunal held that denial of credit based solely on this ground was unjustified. The matter was remanded for a fresh decision, with the appellants given the chance to provide evidence of inputs in stock. The appeal was allowed by way of remand, ensuring a fair opportunity for the appellants to present their case.