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of <h1>Tribunal Decides MODVAT & CENVAT Credit Issues: Allows Export Credit, Requires Scrap Reversal, Denies Dismantling Charges.</h1> <h3>COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I Versus RFH. METAL CASTINGS (P) LTD.</h3> COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I Versus RFH. METAL CASTINGS (P) LTD. - 2005 (184) E.L.T. 194 (Tri. - Del.) Issues:1. MODVAT Credit eligibility for exported M.S. steel tubes.2. Reversal of CENVAT Credit on returned goods cleared as scrap.3. Availment of CENVAT Credit on dismantling and re-erection charges.Issue 1: MODVAT Credit eligibility for exported M.S. steel tubesThe appeal involved a dispute regarding the eligibility of MODVAT Credit for M.S. steel tubes exported after undergoing various processes. The appellant contended that as per Board Circular and Tribunal decisions, MODVAT Credit should be allowed. The Tribunal, citing the decision in Rico Auto Industries Ltd., held that MODVAT Credit cannot be disallowed if inputs are removed under bond, as clarified by Circular No. 283/117/1996-C.X. Consequently, the appeal by the assessee was allowed based on the Board's Circular and Tribunal precedent.Issue 2: Reversal of CENVAT Credit on returned goods cleared as scrapThe issue revolved around the reversal of CENVAT Credit on returned goods cleared as scrap, as per Rule 16(2) of the CENVAT Rules, 2002. The appellant argued that the returned goods were damaged beyond repair and converted into scrap, thus not subject to full credit reversal. However, the Tribunal disagreed, emphasizing that if the process applied does not amount to manufacture, the full CENVAT Credit must be reversed. The Tribunal set aside the Commissioner's decision and held the assessee liable to reverse the entire credit taken on the returned goods.Issue 3: Availment of CENVAT Credit on dismantling and re-erection chargesThe dispute centered on availing CENVAT Credit on dismantling and re-erection charges for purchased equipment. The appellant claimed credit based on the supplier's payment of Central Excise duty. However, the Tribunal ruled that as no new goods were received by the assessee, MODVAT Credit was not applicable to charges like dismantling and re-erection. Citing precedent and emphasizing that such charges are not excisable goods, the Tribunal set aside the Commissioner's decision on allowing MODVAT Credit for these charges. Additionally, a penalty of Rs. 20,000 was imposed on the assessee for wrongly availing MODVAT Credit.
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