2018 (7) TMI 911 - AT - Central Excise

Tribunal Allows Modvat Credit on Inputs Stock from 01.03.1994, Emphasizes Bill Certification

The Tribunal set aside the adjudicating authority's order disallowing Modvat Credit on inputs in stock as of 01.03.1994, emphasizing credit availability ... CENVAT/MODVAT Credit - inputs lying in stock - transitional provisions - denial of credit also on the ground of endorsed duty paying documents - Held that:- The denial of credit, merely for the reason of the duty paying documents being endorsed, would defeat the purpose of the statute in extending the intended Modvat Credit relief, and, therefore, denial of credit should not be on that ground alone, but only on finding, upon verification that the consignment in question had not discharged the duty claimed as Modvat Credit - This issue has also been clarified by Board vide Circular No.441/7/99-Cx dated 23.02.1999. Since the Tribunal vide its earlier order had allowed transitional benefit in respect of goods lying in stock as on 01.03.1994, and in view of the settled legal position, the adjudicating authority cannot readjudicate the issues which had already attained finality. Appeal allowed - decided in favor of appellant. Issues Involved:1. Admissibility of Modvat Credit on inputs lying in stock as of 01.03.1994.2. Validity of Modvat Credit taken on Photostat copies of Bills of Entry/GP-Is or certified copies.3. Requirement of prior permission for availing Modvat Credit under Rule 57H.4. Whether the adjudicating authority could re-examine issues already decided in favor of the appellant.Issue-wise Detailed Analysis:1. Admissibility of Modvat Credit on inputs lying in stock as of 01.03.1994:The appellant, engaged in manufacturing petroleum products, was allowed to avail Modvat Credit on inputs lying in stock as of 01.03.1994. The initial adjudicating authority allowed the credit from 21.03.1994, the date of acknowledgment of the declaration, instead of 01.03.1994. The Tribunal, in its previous order, clarified that credit is available for goods lying in stock as of 01.03.1994 and remanded the matter for verification. The Commissioner, in the de novo order, disallowed the credit amounting to Rs. 1,21,93,989/-, which was contested by the appellant.2. Validity of Modvat Credit taken on Photostat copies of Bills of Entry/GP-Is or certified copies:The appellant contended that Modvat Credit was availed based on certificates or Photostat copies of bills of entry certified by the Customs Authorities at Calcutta. The adjudicating authority initially allowed this credit, referencing Trade Notices and Tribunal decisions that recognized certificates issued by public sector undertakings as valid documents for availing Modvat Credit. The Tribunal upheld this view, noting that denying credit on the ground of endorsed documents would defeat the statute's purpose.3. Requirement of prior permission for availing Modvat Credit under Rule 57H:The Show Cause Notice alleged that the appellant availed Modvat Credit on stock available at the time of filing the declaration under Rule 57G without obtaining prior permission from the jurisdictional Assistant Collector under Rule 57H. The adjudicating authority's initial order and subsequent Tribunal decisions did not emphasize this requirement, focusing instead on the validity of the documents and the date of acknowledgment.4. Whether the adjudicating authority could re-examine issues already decided in favor of the appellant:The appellant argued that the adjudicating authority, in the de novo proceedings, had no authority to re-examine issues already decided in their favor by the Tribunal and the Assistant Commissioner. The Tribunal agreed, stating that the adjudicating authority misconceived the issue, which was limited to verifying goods lying in stock as of 01.03.1994. The denial of credit on previously settled grounds was deemed inappropriate.Conclusion:The Tribunal found that the adjudicating authority's de novo order was not sustainable as it revisited issues already settled by previous orders and the Tribunal's directions. The denial of Modvat Credit based on endorsed documents was also rejected, emphasizing the intended statutory relief. Consequently, the impugned order was set aside, and the appeal filed by the appellant was allowed.