2007 (11) TMI 255 - AT - Central Excise

Appellate Tribunal upholds Modvat credit for exempted goods, stresses procedural compliance

The Appellate Tribunal CESTAT, NEW DELHI ruled in favor of the respondent regarding the availment of Modvat credit on exempted goods. The Tribunal upheld ... DR contended that the respondent cannot avail credit on defaced invoices and the adjudicating authority rightly held that the respondent would have availed credit only on a certificate issued u/r 57E - Rule 57E was applicable in cases where duty paid on any inputs was varied subsequently due to any reason resulting in payment of refund, or recovery of more duty from the manufacture or importer, which is not in the instant case - credit cannot be denied on mere procedural lapse Issues:Availment of Modvat credit on exempted goods, interpretation of Rule 57E of Central Excise Rules, procedural lapse in availing credit.Analysis:The judgment by the Appellate Tribunal CESTAT, NEW DELHI involved the issue of availment of Modvat credit on exempted goods. The respondent sought to avail credit on left out exempted goods when certain bulbs became non-dutiable. The learned Authorized Representative argued that the credit should have been availed under Rule 57E of the erstwhile Central Excise Rules. However, the Commissioner (Appeals) found that the respondent had followed CBEC guidelines on Modvat, adjusting the credit after actual use of inputs. The Commissioner (Appeals) allowed the credit after verifying the evidence submitted, emphasizing that credit cannot be denied on procedural lapses.The Tribunal noted that the respondent was entitled to avail the credit and the only dispute was regarding the method of availing it under Rule 57E. The Commissioner (Appeals) had accepted the credit after due verification and found no reason to interfere with the decision. It was emphasized that credit cannot be denied solely on procedural grounds. The Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue.In conclusion, the judgment clarified the entitlement of the respondent to avail Modvat credit on exempted goods, emphasizing that procedural lapses should not be a reason to deny credit. The Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue, highlighting the importance of following established guidelines and procedures in availing credits under the Central Excise Rules.