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of <h1>Tribunal allows Modvat credit for parts used in manufacturing plant assembly</h1> The appeal filed by the Revenue against the Order-in-Original was dismissed by the Appellate Tribunal CESTAT, New Delhi. The Tribunal held that the ... Cenvat/Modvat - Capital goods Issues:1. Benefit of Modvat credit on parts used in the manufacture of chassis painting plant.2. Entitlement of credit when goods are received from a third party for manufacturing.Analysis:Issue 1: The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner (Appeals) regarding the respondents availing the benefit of Modvat credit on parts used in the manufacture of a chassis painting plant in their factory. The Revenue contended that since the chassis painting plant was manufactured by a third party, the respondents were not entitled to the credit. The adjudicating authority confirmed the demand, but the Commissioner (Appeals) allowed the appeal in favor of the respondents.Issue 2: The main contention was whether the respondents, who received parts from a third party for the chassis painting plant, were entitled to the Modvat credit. The respondents argued that the parts were directly consigned to their factory, with their name mentioned in the invoice as the consignee along with the contractor's name. They relied on previous Tribunal decisions to support their claim. The Tribunal found that the parts were received by the respondents, who got the chassis painting plant manufactured through a contractor. Relying on past decisions, the Tribunal held that when capital goods are assembled through a contractor and used in the manufacture of final products, the entity is entitled to credit on the parts of capital goods. Consequently, the appeal was dismissed.The judgment was delivered by the Appellate Tribunal CESTAT, New Delhi, with the members S.S. Kang and V.K. Agrawal presiding. The decision was based on the interpretation of Modvat credit rules and the entitlement to credit when goods are received from a third party for manufacturing purposes. The Tribunal's analysis considered the specific circumstances of the case, the relevant legal provisions, and precedent set by previous Tribunal decisions.
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