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of <h1>Appellate tribunal overturns disallowance of Modvat credit, citing lack of evidence.</h1> The appellate tribunal set aside the impugned order disallowing Modvat credit of approximately Rs. 24 lakhs to the appellant company, citing lack of ... Cenvat/Modvat Issues:Disallowed Modvat credit of Rs. 24 lakhs, penalties on appellantsAnalysis:The impugned order disallowed Modvat credit of approximately Rs. 24 lakhs to the appellant company, citing fraudulent availing of the credit. The order stated that the inputs for which credit was claimed were not actually used in the production of rubber parts as claimed by the appellant. This conclusion was based on an inspection of the factory, statements from various parties including employees and suppliers, and the absence of necessary machinery and inputs during a visit by excise officers. The appellant contended that the inputs were indeed used for manufacturing rubber parts for pumps, and explained the absence of machinery by stating that it was shifted to a new location due to pollution control regulations. The order rejected the appellant's explanations, leading to the disallowance of credit and imposition of penalties.The appellant's statutory books of accounts consistently recorded the receipt and use of the disputed inputs, which was supported by production records and visits by Central Excise Officers. The appellant also provided evidence of shifting machinery to a new location and receiving rubber parts from there, as well as correspondence with relevant authorities. The order noted that the manufacturing units from which the rubber parts were allegedly procured did not have statutory evidence supporting the claim. The order's findings were deemed contrary to the verified statutory records and documentary evidence provided by the appellant, leading to the conclusion that the disallowance of Modvat credit and penalties were not sustainable.In light of the verified statutory records and evidence presented by the appellant, the appellate tribunal held that the finding of fraudulently availing Modvat credit was not sustainable. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellants. The penalties imposed were also deemed unsustainable due to the lack of substantiated findings regarding the credit availed.
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