1997 (3) TMI 262 - AT - Central Excise

Successful appeal establishes correlation between goods sent and received for Modvat credit.

JCT. LTD. Versus COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

JCT. LTD. Versus COLLECTOR OF CENTRAL EXCISE, CHANDIGARH - 1998 (98) E.L.T. 533 (Tribunal) Issues:- Modvat credit availed by the appellant on steel wire rods- Denial of credit by the authorities due to lack of correlation between goods sent out and received back- Appeal against the orders of the Assistant Collector and Collector (Appeals)Analysis:The appellant, engaged in manufacturing steel wires, availed Modvat credit on steel wire rods received under GPIs issued by M/s. Modi Steels. The authorities noticed discrepancies in the Modvat credit claimed by the appellant, leading to the denial of credit. The issue revolved around the lack of correlation between the goods sent out for reconditioning and the goods received back by the appellant. The Assistant Collector and Collector (Appeals) upheld the denial, citing the absence of evidence linking the returned goods to the original goods sent out. The appellant challenged these decisions through the current appeal.During the proceedings, the appellant's counsel argued that the goods returned to the appellant from M/s. Modi Industries were the same ones for which Modvat credit had been initially claimed. The missing link was related to the original GPI issued by M/s. Modi Industries when the goods were first cleared. However, the GPIs for the returned goods referenced the original GPIs, establishing a correlation between the goods sent out and those received back. The appellant contended that this correlation justified the allowance of Modvat credit, contrary to the authorities' decision.Upon reviewing the submissions and relevant documents, including GPIs and excise duty payment records, the judge found that the appellant had successfully demonstrated the link between the goods sent for reconditioning and those returned. The documents provided, such as GPIs covering the quantity of steel wire rods and return of rejected rods, supported the appellant's claim of correlation. Consequently, the judge ruled in favor of the appellant, setting aside the previous orders and allowing the appeals. The decision emphasized the establishment of a clear connection between the goods sent out and those received back as the basis for granting Modvat credit to the appellant.