2002 (9) TMI 754 - AT - Central Excise

Tribunal Upholds Deemed Modvat Credit Decision, Rejects Revenue Challenge

The Tribunal upheld the Commissioner (Appeals)' decision allowing deemed Modvat credit based on Range Officers' certifications, rejecting Revenue's ... Appeal by Department - Grounds - Cenvat/Modvat - Deemed credit - Duty paid character Issues:Admissibility of deemed Modvat credit on inputs supplied under Compounded Levy Scheme.Analysis:The central issue in this case pertains to the admissibility of deemed Modvat credit taken by the respondents on inputs supplied by manufacturers under the Compounded Levy Scheme. The Revenue challenged the admissibility of this credit, arguing that the duty liability of the input-manufacturers was not duly discharged, thus rendering the credit inadmissible. The Department contended that subsequent inquiries revealed that the Range Officer had incorrectly certified the payment of central excise duty by the manufacturers. The Department relied on specific tribunal decisions to support its stance.On the other hand, the respondents opposed these arguments, citing tribunal decisions in their favor. They maintained that the order passed by the Commissioner (Appeals) allowing the deemed Modvat credit was valid, as the Range Officers had certified the discharge of duty liability by the manufacturers. The respondents urged the Tribunal to affirm the Commissioner's order in their favor.Upon careful examination of the submissions, the Tribunal found that the Commissioner (Appeals) had correctly allowed the deemed Modvat credit based on the certifications provided by the Range Officers at that time. The Tribunal emphasized that subsequent investigations revealing discrepancies in the certifications could not be used to challenge the validity of the earlier order. The Tribunal clarified that any post-order developments should be addressed through appropriate actions under the law against defaulting manufacturers or Range Officers, rather than retroactively affecting the Commissioner's decision.The Tribunal highlighted that the focus on the certificates issued by Range Officers was misplaced, as the relevant Notification did not mandate such certifications for availing deemed Modvat credit. Referring to a specific tribunal decision, the Tribunal emphasized that the declaration by the Central Government regarding the payment of excise duty on inputs under the Compounded Levy Scheme was paramount, making additional verifications redundant. The Tribunal chose to follow the precedent set in the Delhi Steel Industries case, as no information indicated a stay on its application.Ultimately, the Tribunal found no fault in the order passed by the Commissioner (Appeals) and rejected the Revenue's appeals. The Tribunal's decision rested on the principle that subsequent inquiries should not undermine the validity of earlier orders unless there was evidence of perversity in the original decision. The judgment reaffirmed the importance of upholding decisions based on the facts available at the time of adjudication, without retroactive challenges based on subsequent developments.