Whether Modvat credit on rejected goods is admissible on party’s own invoice?

PJ/Case Laws/2012-13/1239

Case: - COMMISSIONER OF C. EX., MEERUT-II VERSUS POLYPLEX CORPORATION LTD.

Citation: - 2008 (224) E.L.T. 46 (UTTARAKHAND)

Brief fact: - The brief fact of the case is that M/s. Polyplex Corporation Ltd. Khatima, U.S. Nagar is engaged in the manufacture of Polyster film. The Show cause notice issued to the party by the Assistant Commissioner, Central Excise, Division Rampur with the allegation that they availed Modvat credit of Rs. 1,10,230/- during the period of September, 1998 to November, 1998. Another show cause notice was issued by the Range Superintendent for the period of December, 1998 to February, 1999 with the allegation that the party had availed Modvat credit of Rs. 1,94,702/- on the goods against their own invoice without filing D-3 intimation. On adjudicating both the show cause notices, the Deputy Commissioner, Central Excise, Rampur confirmed demand of Rs. 3,04,932/- and also imposed penalty of Rs. 3,04,932/-. In Appeal, the Commissioner (Appeals) Central Excise, Ghaziabad vide order dated 13-4-2000 confirmed demand of duty, and, however, reduced penalty from Rs. 3,04,932/- to Rs. 1,52,000/-. Against the order of the Commissioner (Appeals), appeal was preferred before the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi, who vide impugned order dated 13-7-2000 allowed the appeal of the Firm.
Being aggrieved by the judgment and order of the Tribunal, the Revenue has preferred this Reference before this Court.

Reasoning of Judgment: The Hon’ble High Court held that questions framed in the Reference Application have rightly been decided by the Tribunal and do not require to be considered by this Court. The Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi has rightly held that the defective/rejected final products returned to the manufacturers and used in or in relation to the manufacture of final products are eligible inputs for the purpose of Modvat credit and the appellants were allowed unconditional waiver of pre-deposit of amount of the duty and penalty imposed on them. The Hon’ble High Court do not find infirmity and illegality in the aforesaid view taken by the Tribunal. Therefore, the Reference Application is disposed of in favour of the Firm and against the Revenue. The impugned order dated 13-7-2000 passed by the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi is upheld.

Decision:- Reference disposed off

Comments :- This issue is normally raised by the audit party wherein they object how a party can take the credit on its own invoices. But new Rule 16 of Central Excise Rules also say that the goods should accompany with duty paying document and does not warrant that the same should be issued by the buyer. Moreover, when the buyer does not take the credit (normally in consumer goods industry) then the goods are returned on party’s own invoice only. In spite of number of decisions on this matter, the department raises the objection. This is truly said that the central excise and service tax department is highly litigant department.

Comments

PJ/Case Laws/2012-13/1239

Post a Comment

Query