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<h1>Tribunal grants Modvat credit benefit, overturns denial for non-manufacturers.</h1> The Tribunal set aside the order denying the appellants the benefit of Modvat credit, ruling that the denial was unjustified as the appellants were not ... Cenvat/Modvat - Input Issues:- Denial of Modvat credit benefit to the appellants.- Applicability of Notification No. 29/96-C.E.- Imposition of penalty by the Adjudicating Authority.Analysis:1. Denial of Modvat credit benefit to the appellants:The appellants filed an appeal against the Order-in-Appeal which denied them the benefit of Modvat credit to the extent of 50%. The issue arose because the manufacturers of the inputs, i.e., pile cut fabrics, were not considered entitled to the benefit of Notification No. 29/96-C.E. The show cause notice alleged that the appellants had taken Modvat credit, including the deemed credit availed by the suppliers of the inputs, which was contrary to the Modvat Rules. The Adjudicating Authority confirmed the demand and imposed a penalty, leading to the contention by the appellants that the assessment made at the time of clearance of the inputs should not be reopened when they were taking credit.2. Applicability of Notification No. 29/96-C.E.:The appellants were engaged in the manufacture of cotton corduroy fabrics and received pile cut fabrics from different manufacturers who had cleared the goods after availing the deemed credit under notification No. 29/96-C.E. The dispute arose regarding whether the pile cut fabrics received by the appellants were entitled to the benefit of the notification. The Revenue contended that the pile cut fabrics received were not eligible for the notification's benefit, leading to the denial of the Modvat credit to the appellants.3. Imposition of penalty by the Adjudicating Authority:The Adjudicating Authority confirmed the demand and imposed a penalty on the appellants. However, the appellants argued that since they were not the manufacturers of pile cut fabrics or availing the benefit of the notification, the denial of the Modvat credit to them was not justified. The Tribunal observed that when the assessments were final at the time of clearance of pile cut fabrics, the benefit could not be denied to the appellants at a later stage when they were only taking credit based on the invoices showing payment of duty. Consequently, the order denying the benefit of credit to the appellants was set aside, and the appeal was allowed.
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