Tribunal allows Modvat credit appeal for written-off goods, citing factory premises rule.

The Tribunal ruled in favor of the appellant, allowing the appeal related to the denial of Modvat credit for goods written off between 1991-92 to 1994-96. The decision was based on the precedent set in a previous case where it was held that if goods were within the factory premises without a prescribed time for consumption, the Department cannot disallow Modvat credit. The Tribunal accepted the party's argument that no offense was committed as there was no removal of the charged-off items, and granted any consequential relief deemed necessary.

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Issues involved: Modvat credit denial based on goods written off in specific financial years.

Judgment Details:

Issue 1: Modvat credit denial
The issue pertained to the denial of Modvat credit due to goods being written off between 1991-92 to 1994-96. The party argued that as there was no prescribed time for consumption and the goods were within the factory premises, no violation of Central Excise Rules occurred. It was contended that since no removal of charged off items took place, no offense was committed. The Tribunal referred to the case of Oswal Agro Mills Ltd. where it was held that if goods were within the factory premises without a prescribed time for consumption, the Department cannot disallow Modvat credit on the assumption that the goods may not be used as input. Considering this precedent, the Tribunal accepted the party's contention and allowed the appeal with any consequential relief.

Conclusion:
The Tribunal ruled in favor of the appellant, allowing the appeal and providing any consequential relief deemed necessary.

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