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of <h1>Tribunal grants exemption after appellants rectify Modvat credit error</h1> <h3>WEARWELL TYRE & TUBES INDUSTRIES PVT. LTD. Versus COLLR. OF C. EX., INDORE</h3> WEARWELL TYRE & TUBES INDUSTRIES PVT. LTD. Versus COLLR. OF C. EX., INDORE - 2004 (165) E.L.T. 409 (Tri. - Del.) Issues:The appeal challenges the order of the Addl. Collector of Central Excise, Indore demanding duty due to the removal of rubber sheets without payment of duty despite Modvat credit being taken.Analysis:The appellants mistakenly took Modvat credit for goods exempted under Notification No. 71/68 but rectified the error by making a reverse entry before detection. The reversal of credit on inputs used in manufacturing exempted goods entitles them to exemption, as held in the case law of Chandrapur Magnet Wires (P) Ltd. v. Collector of Central Excise, Nagpur and Shah & Merwade Packings Pvt. Ltd. v. Commissioner of Central Excise, Belgaum.Decision:After considering arguments from both sides, the Tribunal noted the reversal of duty credit before the factory visit, aligning with the legal precedent that debiting Modvat credit on inputs for exempted goods does not disqualify the final product from exemption. As the appellants rectified the error voluntarily, the Tribunal ruled in their favor, setting aside the duty demand and penalty, thus allowing the appeal.
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