TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Upholds Modvat Credit on Returned Defective Goods Despite Department's Disallowance</h1> <h3>COMMISSIONER OF CENTRAL EXCISE, MEERUT-I Versus BHUSHAN STEEL & STRIPS</h3> COMMISSIONER OF CENTRAL EXCISE, MEERUT-I Versus BHUSHAN STEEL & STRIPS - 2000 (120) E.L.T. 431 (Tribunal) Issues:1. Availability of modvat credit on finished goods returned to the manufacturer due to defects.2. Interpretation of Rule 57A of the Central Excise Rules, 1944 regarding modvat credit eligibility.3. Ambiguity in legal position regarding processing defective goods for modvat credit.4. Referral of a question of law to the Hon'ble High Court under Section 35G of the Central Excise Act, 1944.Issue 1: Availability of modvat credit on finished goods returned due to defectsThe Tribunal upheld the Order-in-Appeal, allowing modvat credit on finished goods returned to the manufacturer by customers due to defects. The Department contended that as finished products, these goods were not eligible for modvat credit under Rule 57A read with Rule 57G. Despite the Department's initial disallowance, the Commissioner (Appeals) and the Tribunal confirmed the credit, amounting to Rs. 6,88,548/-, leading to the present Reference Application by the Department.Issue 2: Interpretation of Rule 57A for modvat credit eligibilityThe Department argued that modvat credit is only available on duty paid goods used in or related to the manufacture of final products as per Rule 57A. Citing precedents like I.C.I. v. CCE and other tribunal decisions, the Department contended that processing defective goods for removal of defects does not constitute manufacturing, thus not qualifying for modvat credit. This interpretation led to the question of law regarding the eligibility of defective goods for modvat credit under Rule 57A.Issue 3: Ambiguity in legal position on processing defective goodsThe Tribunal noted ambiguity in the legal position concerning the processing of defective goods for modvat credit. While relying on case laws like Alcobex Metals Ltd. and Udasee Stamping (P) Ltd., the Tribunal considered whether re-processing defective goods, not for remelting but for defect removal, aligns with modvat credit provisions. Provisions like Rule 173H and 173L were highlighted to argue against modvat credit eligibility for goods received for re-making, re-conditioning, or repairing.Issue 4: Referral of a question of law to the Hon'ble High CourtAfter considering submissions and acknowledging ambiguity, the Tribunal decided to refer a question of law to the Hon'ble High Court under Section 35G of the Central Excise Act, 1944. The question pertained to whether processing defective goods, as per Rules 173H and 173L, can be treated as inputs for modvat credit under Rule 57A. The Tribunal directed the Registry to proceed with the referral, accepting and disposing of the Reference Application accordingly.
TaxTMI 
TaxTMI 
