Modvat credit on duty-paid copper scrap cannot be denied when the duty payment is accepted and the goods return from job work.

Modvat credit could not be denied on differential duty paid on copper scrap cleared for job work under Rule 57F(4) when the duty payment itself was undisputed. Once the duty on the scrap was accepted as paid, the Revenue had no basis to refuse credit of the same amount on the goods received back from the job worker. The denial of Modvat credit was therefore unsustainable, and the appeal was allowed.

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Issues: Whether Modvat credit could be denied in respect of the differential duty paid on copper scrap cleared under Rule 57F(4) of the Central Excise Rules, 1944 when the duty payment was not disputed.

Analysis: The duty paid on the copper scrap cleared for job work was not in dispute. Once such payment of duty was accepted, the Revenue had no basis to deny Modvat credit of the same amount when the goods were received back from the job worker.

Conclusion: The denial of Modvat credit was unsustainable and the appeal was allowed.

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