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of <h1>Tribunal Upholds Decision on Modvat Credit for Grey Fabrics</h1> <h3>Commissioner of Central Excise, Surat Versus M/s. Indrayani Exports (P) Limited</h3> Commissioner of Central Excise, Surat Versus M/s. Indrayani Exports (P) Limited - 2011 (272) E.L.T. 410 (Tri. - Ahmd.) Issues:- Availability of deemed modvat credit for grey fabrics- Dispute regarding sending goods to job workers- Allegation of being a fake unit- Examination of documents by Commissioner (Appeal)- Reversal of modvat credit at the time of clearance- Payment of duty by processing houses on behalf of the assessee- Relevance of export of processed fabricsAnalysis:The case involves a dispute over the availability of deemed modvat credit for grey fabrics held by the respondent as of 01.04.2004. The Revenue contended that the modvat credit was not valid for goods sent to job workers, initiating proceedings to deny the credit. The Commissioner (Appeal) initially confirmed this decision, but the Tribunal remanded the case for further consideration of evidence. In the de-novo proceedings, the Commissioner (Appeal) found that the grey fabrics were sent to job workers for processing, with duty paid by the job workers on behalf of the respondent. This process was in compliance with Rule 12-B of the Central Excise Rules, leading to the correct availing of cenvat credit as per relevant notifications.Regarding the allegation of the respondent being a fake unit, the Tribunal noted that this issue was not part of the original proceedings and could not be used to set aside the Commissioner (Appeal)'s decision. Even if the unit was under scrutiny, it did not impact the specific modvat credit in question. The examination of documents by the Commissioner (Appeal) was in line with the Tribunal's directions, and objections from the Revenue on this matter were dismissed.The crucial point of contention was the reversal of modvat credit at the time of clearance of grey fabrics by the processing houses. The Commissioner (Appeal) confirmed that duty was paid by the processing houses on the processed fabrics, which the Revenue did not dispute. As a result, the denial of credit by the Revenue was deemed unnecessary as the duty had already been paid during clearance. The export of processed fabrics became irrelevant once it was established that duty payment had occurred.Ultimately, the Tribunal found no fault in the Commissioner (Appeal)'s decision and rejected the Revenue's appeal. The case highlights the importance of proper documentation, compliance with excise rules, and the significance of duty payment in determining the validity of modvat credit claims for grey fabrics.
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