2000 (2) TMI 279 - AT - Central Excise

Appellate Tribunal Grants Modvat Credit for LDO Use in Manufacturing Process

The Appellate Tribunal allowed the appeal, ruling in favor of the appellant on all issues. The Tribunal held that Modvat credit on Light Diesel Oil (LDO) ... Modvat - Duty paying documents Issues:1. Admissibility of Modvat credit on Light Diesel Oil (LDO).2. Admissibility of Modvat credit on the original copy of the invoice.3. Availment of Modvat credit by the successor unit after a change in management.Analysis:1. The Appellate Tribunal considered the issue of the admissibility of Modvat credit on Light Diesel Oil (LDO). Referring to a previous decision by the Larger Bench in the case of Ballarpur Industries, the Tribunal held that if a substance, such as LDO, is used in a process that ultimately contributes to the manufacturing of the final product, it is eligible for Modvat credit. In this case, LDO was used for producing steam, which was essential for the manufacturing process, similar to the scenario in the aforementioned case. Therefore, the Tribunal concluded that LDO is admissible for Modvat credit.2. Another issue addressed was the admissibility of Modvat credit based on the original copy of the invoice. The Tribunal noted that Trade Notices issued by two Collectorates during the relevant period explicitly allowed Modvat credit to be claimed based on the original copy of the invoice. Citing the clarity provided by these Trade Notices, the Tribunal ruled that the appellant rightfully claimed Modvat credit using the original invoice copy. Additionally, the Tribunal referenced a Supreme Court case involving Steel Authority of India, which supported the validity of claiming Modvat credit based on the original invoice copy.3. The Tribunal also examined the situation where a successor unit sought to avail Modvat credit following a change in management. It referenced a previous decision involving Usha Iron & Ferro Metal Corporation Ltd., which established that a change in management does not impact the eligibility of claiming credit if the same specified goods are manufactured using the same inputs post-management change. Applying this precedent to the current case, the Tribunal determined that the successor unit was entitled to avail Modvat credit despite the change in management, as long as the manufacturing process remained consistent.In conclusion, the Appellate Tribunal allowed the appeal, ruling in favor of the appellant on all the issues discussed. The Tribunal directed that any consequential relief be granted to the appellants as per the law.