1997 (2) TMI 273 - AT - Central Excise

Tribunal Upholds Modvat Credit for Duty Paid Inputs via Consignment Agents

The Tribunal upheld the Collector (Appeals) decision in a case involving the admissibility for Modvat of challans issued by consignment agents for duty ... Modvat - Duty paying documents Issues:Admissibility for Modvat of challans issued by consignment agents for duty paid inputs.Detailed Analysis:Issue: Admissibility for Modvat of challans issued by consignment agents for duty paid inputsThe case involved an appeal by the Department seeking to set aside the order of the Collector (Appeals) regarding the admissibility for Modvat of challans issued by consignment agents for duty paid inputs. The appellants were manufacturing products falling under specific chapters of the Central Excise Tariff Act and were availing Modvat credit on duty paid inputs received from consignment agents. The Department contended that the consignment agents were not the authorized canalizing agency as per the circular issued by the Board, making the certificates issued by them invalid. The Assistant Collector disallowed the credit initially, but the Collector (Appeals) reversed this decision, leading to the Department's appeal.The Department argued that the circular prescribed by the CBEC mandated accepting challans issued by specific canalizing agencies as evidence of duty payment for availing Modvat credit. They emphasized the mandatory nature of these directions and contended that the respondents had not fulfilled the conditions for availing Modvat credit by relying on certificates from consignment agents instead of the prescribed canalizing agencies. The Department asserted that the Collector (Appeals) did not give due consideration to the mandatory nature of the circular, leading to an erroneous decision.In response, the respondents' consultant argued that the consignment agent, in this case, was authorized to certify the duty paid character of the inputs for Modvat credit. They highlighted that the consignment agents were recognized handling agents under the Board's circular and acted on behalf of the principal company. Referring to a previous Tribunal order involving similar circumstances, where the consignment agents were accepted as acting on behalf of the principal company, the consultant contended that the challans clearly indicated the consignment agents' role as representatives of the principal company, fulfilling the requirements for availing Modvat credit.The Tribunal, after considering the arguments, found merit in the consultant's contentions. They agreed with the Collector (Appeals) that the consignment agents were acting on behalf of the principal company, as evidenced by the challans and the nature of their relationship. The Tribunal concluded that the essential requirements of the Board's circular and Rule 57G were met in this case, leading to the dismissal of the Departmental appeal. The Tribunal upheld the Collector (Appeals) decision based on the facts and records available, emphasizing the consignment agents' role as authorized representatives of the principal company for availing Modvat credit.