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of <h1>Tribunal adjusts duty calculation, allows modvat credit, upholds deduction in ship construction case</h1> <h3>Commissioner of Central Excise, Thane-II Versus A.K. Udyog</h3> The Revenue's appeal was allowed by the Tribunal in a case involving duty computation, modvat credit disallowance, and deduction towards erection and ... Duty demand - MODVAT Credit - Adjustment of tax - Held that:- While issuing the demand notice, payment of ₹ 20,128/- through PLA as also modvat credit of ₹ 11,40,188/- has already been taken into consideration. The demand in respect of the said clearances amounting to ₹ 9,41,109/- has been arrived after extending the said benefit. Thus, we agree with the contention of the Revenue that this has resulted in the adjustment of the paid amount twice. We, therefore, order that the duty paid should be considered as ₹ 10,00,000/- + ₹ 6,10,337/- (Rs.17,50,525/- - ₹ 11,40,188/-) extending the said benefit, the net duty leviable will be ₹ 40,38,454. Revenue contends that modvat credit against payment of CVD cannot be extended as the same had been disallowed by order-in-original dated 9.10.2011. We have seen the said order-in-original. In the said order-in-original, the Revenue has already proposed recovery of the said amount. The respondent-assessee has taken the credit of the said amount only once. We, therefore, do not see there is any adjustment of modvat credit against duty payable. Entire ship does not consist of M.S. alone and the Commissioner has given a deduction of 10% towards erections and fitments for constructing ship, cabin crew etc. The Revenue is submitting that in the calculation, a benefit of 326.740 MT of firewood has already been given. Firewood and erection and fitments for constructing ships cabin crew etc. are different things. A lot of wood is used in the ship even for proper storage of the goods etc. In view of the said position, we do not find any merit in the contention of the Revenue to disallow 10% deduction towards erecting and fitment for constructing ship cabin crew etc. - penalty under Section 11AC has been imposed which is required to be equal to the duty imposed. Accordingly the penalty imposed under Section 11AC is also increased - Decided partly in favour of Revenue. Issues:1. Duty computation and double adjustment of paid amount2. Disallowance of modvat credit against payment of CVD3. Deduction towards erection and fitment for constructing shipsAnalysis:Issue 1: Duty computation and double adjustment of paid amountThe Revenue filed an appeal against the order confirming a demand of &8377; 28,78,138/- on MS scrap obtained from ship-breaking. The Commissioner had considered the duty paid through PLA and modvat credit, resulting in the adjustment of the paid amount twice. The Revenue contended that the duty paid should be considered as &8377; 10,00,000/- + &8377; 6,10,337/-, leading to a net duty leviable of &8377; 40,38,454/-. The Tribunal agreed with the Revenue's contention, adjusting the duty calculation accordingly.Issue 2: Disallowance of modvat credit against payment of CVDThe Revenue raised a concern regarding the disallowance of modvat credit against payment of CVD, as per an earlier order-in-original. However, the Tribunal noted that the modvat credit had been taken only once by the respondent-assessee. Consequently, the plea to disallow modvat credit against duty payable was rejected.Issue 3: Deduction towards erection and fitment for constructing shipsThe Revenue disputed the allowance of a 10% deduction towards erecting and fitment for constructing ships, cabin crew, etc. The Commissioner had already given an allowance for firewood, which the Revenue argued should be considered separately. The Tribunal found no merit in the Revenue's contention and upheld the deduction towards erection and fitment. The duty confirmed was increased to &8377; 40,38,454/-, and the penalty under Section 11AC was also increased accordingly.In conclusion, the Revenue's appeal was allowed, and the Tribunal made adjustments to the duty computation, modvat credit disallowance, and deduction towards erection and fitment, resulting in an increased duty amount and penalty under Section 11AC.
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