2007 (3) TMI 650 - AT - Central Excise

Appellant denied deemed Modvat credit for nil-duty inputs; penalty waived; Tribunal decisions cited.

The appellant's claim for deemed Modvat credit under Government Order No. 332/30/87-TRU for inputs cleared at nil rate of duty was denied. The ... Cenvat/Modvat - Deemed credit Issues involved: Whether appellant entitled to deemed Modvat credit under Govt. Order No. 332/30/87-TRU u/s Rule 57G(2) for inputs cleared at nil rate of duty.Summary:The appeal dealt with the entitlement of the appellant to deemed Modvat credit under Government Order No. 332/30/87-TRU issued u/s Rule 57G(2) for inputs cleared at nil rate of duty. The Commissioner (Appeals) confirmed the duty demand based on Tribunal decisions stating that deemed Modvat credit is not available when inputs have suffered nil rate of duty. The penalty was set aside due to the absence of mala fide intention.The appellant cited a Tribunal decision in the case of Commissioner of Rajkot v. Vinubhai Steel Co. (P) Ltd., where deemed credit was allowed, distinguishing the Larger Bench decisions. However, it was noted that the Government of India's order under consideration did not prohibit inputs cleared at nil rate of duty, leading to the inapplicability of the cited decision.The Larger Bench decision under Order No. 332/30/87-TRU was found to be applicable in the present case, as waste and scrap were cleared at nil rate of duty, justifying the disallowance of deemed Modvat credit by the authorities.Another letter dated 20-10-87 was mentioned by the appellant's advocate, but it was deemed inapplicable as it was not issued under Rule 57G(2) provisions and did not pertain to the current case where inputs were cleared at nil rate of duty.Ultimately, the appeal was rejected based on the above discussions, finding no merit in the appellant's arguments.