2001 (10) TMI 1080 - AT - Central Excise

Tribunal grants Modvat credit to appellant in deemed credit dispute

RINE MACHINE TOOLS Versus COMMISSIONER OF C. EX., CHANDIGARH

RINE MACHINE TOOLS Versus COMMISSIONER OF C. EX., CHANDIGARH - 2003 (154) E.L.T. 646 (Tri. - Del.) Issues:1. Admissibility of deemed Modvat credit on inputs under Compounded Levy Scheme.2. Requirement of certificates from Central Excise Range Officer.3. Validity of invoices for claiming Modvat credit.4. Burden of proof on the assessee to establish compliance with Modvat credit conditions.5. Denial of Modvat credit based on alleged manufacturing date of inputs.Analysis:1. The case involved the admissibility of deemed Modvat credit on inputs supplied under the Compounded Levy Scheme. The appellant had taken deemed credit on inputs, but the department alleged that part of the credit was inadmissible due to lack of certificates from the Central Excise Range Officer and inputs being manufactured prior to the scheme's implementation.2. The appellant argued that the notification and Modvat rules did not require certificates from Range Officers for establishing duty-paid nature of inputs. The appellant had taken Modvat credit based on invoices with declarations of duty discharge, satisfying the notification's conditions. The appellant contended that the certificates from manufacturers confirming duty payment were not appreciated by the authorities.3. The department contended that the invoices did not contain valid declarations of duty discharge, and only certificates from Range Officers could establish duty payment. The burden was on the assessee to prove compliance with Modvat credit conditions, especially regarding inputs supplied under the Compounded Levy Scheme.4. The Tribunal found that the invoices did not provide a valid declaration as required by the notification. While the noting of 'duty liability to be discharged' was present, it did not meet the standard of 'duty liability discharged.' However, the Tribunal noted that denying a substantive benefit like Modvat credit should not be done hastily, and the appellant should be given an opportunity to produce the necessary certificates.5. Regarding the denial of credit based on the alleged manufacturing date of inputs, the Tribunal found no evidence supporting this claim. The invoices were issued under the Compounded Levy Scheme, and there was no justification for denying the deemed credit. The Tribunal set aside the order, allowing the Modvat credit of Rs. 23,800 and remanding the decision on the Rs. 33,255 credit for further consideration with an opportunity for the appellant to produce required certificates.