2005 (5) TMI 363 - AT - Central Excise

Court overturns disallowance of Modvat credit, rules discrepancies in declaration not grounds for denial.

The court ruled in favor of the appellants regarding the disallowance of Modvat credit for 'Bright Flats' and the imposed penalty. The judge found that ... Cenvat/Modvat Issues: Modvat credit disallowance for 'Bright Flats' and penalty imposition.Analysis:1. Modvat Credit Disallowance: The appellants contested the disallowance of Modvat credit amounting to Rs. 5,643 for 'Bright Flats' in April '96, along with a penalty of Rs. 250. The disallowance was based on the discrepancy that the input was declared as 'Bright Bars' instead of 'Bright Flats' under Rule 57G of the Central Excise Rules, 1944. However, it was noted that the Department did not challenge the correct tariff entry for the input in the declaration. The appellants relied on a Tribunal decision in Kamakhya Steels Pvt. Ltd v. Commissioner, where it was established that under Rule 57G as amended, the Department could not deny input duty credit solely due to a deficiency in the Modvat declaration. This interpretation was further supported by Circular No. 441/7/99-CX issued by the Board. Additionally, reference was made to a Tribunal decision in Citizen Electricals (P) Ltd. v. Commissioner of Central Excise, New Delhi, emphasizing that input duty credit should not be refused based on discrepancies in the declaration.2. Legal Precedents: The judgment highlighted the absence of any binding case law contradicting the established principles and interpretations presented by the appellants. The reliance on previous Tribunal decisions and circulars provided a strong legal basis for overturning the disallowance of Modvat credit and the imposed penalty.3. Decision: After thorough examination of the records and arguments from both sides, the judge concluded that the disallowance of Modvat credit and the penalty were unjustified. Citing the legal provisions, precedents, and circulars, the judge set aside the impugned order and allowed the appeal in favor of the appellants. The operative part of the order was pronounced in open court on 9th May 2005, thereby resolving the dispute in favor of the appellants based on the legal interpretations and precedents presented during the proceedings.