Modvat credit for burning loss in job-work processing upheld where identical dispute was already settled in favour of the assessee.

Modvat credit could not be denied merely because inputs sent to a job worker under Rule 57F(2) returned in reduced quantity due to burning loss. The Tribunal noted that the same assessee's identical dispute had already been decided in its favour in earlier orders, where denial of credit on this ground had been set aside. Following that settled position, the Commissioner (Appeals)'s order allowing the credit was upheld and the Revenue's challenge failed.

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Issues: (i) Whether Modvat credit could be denied on account of burning loss arising in processing of inputs sent to a job worker under Rule 57F(2).

Analysis: The dispute concerned inputs sent with permission to a job worker for processing and return of brass foil and brass sheets. The Tribunal noted that the identical issue in the same assessee's case had already been decided in its favour by earlier orders, which had set aside denial of credit on the ground of burning loss. In view of that settled position, there was no basis to interfere with the Commissioner (Appeals)'s order allowing the credit.

Conclusion: The denial of Modvat credit on burning loss was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order allowing the assessee's claim was upheld and the Revenue's appeal failed.

Ratio Decidendi: Where an identical Modvat credit dispute has already been settled in favour of the assessee, credit cannot be denied merely because the quantity received after processing is less than the quantity dispatched to the job worker on account of burning loss.

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