Tribunal grants relief, deems denial of Modvat credit unjustified. The Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant. The denial of deemed Modvat credit under ...
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Tribunal grants relief, deems denial of Modvat credit unjustified.
The Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant. The denial of deemed Modvat credit under Notification No. 58/97 due to supplier's duty payment dispute under the compounded levy scheme was deemed unjustified as the appellant was discharging duty under the compounded levy scheme without dispute, entitling them to the credit provided on a deemed basis at 12% of the price.
Issues: Denial of deemed Modvat credit under Notification No. 58/97 due to supplier's duty payment dispute under compounded levy scheme.
Analysis: 1. The case involves the denial of deemed Modvat credit under Notification No. 58/97, citing the supplier's failure to pay the "appropriate duty of excise" as required by the Notification.
2. The appellant argued that the supplier was discharging duty under compounded rates as per Section 3A of the Central Excise Act, supported by invoices showing direct purchase from the manufacturer and a certificate confirming duty payment under the Compounded Levy Scheme.
3. The Tribunal noted a dispute between the supplier and Central Excise authorities regarding the duty liability under the compounded levy scheme, as evidenced by a certificate from the jurisdictional Superintendent indicating incomplete duty payment by the supplier.
4. The Tribunal emphasized that deemed credit is available under the notification if the supplier pays the appropriate duty under the compounded levy scheme, even if disputes exist between the supplier and authorities regarding the exact amount payable. The denial of credit to the buyer based on such disputes is unwarranted, as the credit is provided on a deemed basis at 12% of the price.
5. It was concluded that since there was no dispute that the appellant was discharging duty under the compounded levy scheme, the denial of credit was unjustified. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, to the appellant.
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