The adjudicating authority, after receipt of the reply to the show cause numberice, by order dated 22.3.2002, disallowed the deemed MODVAT benefit earlier availed and ordered for recovery of the said sum along with interest, and, further imposed penalty of Rs.40,000/ .
58/97 CE NT dated 1.9.1997 and opined that the manufacturer of the inputs had number discharged the appropriate duty liability against the goods cleared vide the invoices and the respondent had number furnished the requisite documentary evidence which companyld companytrovert the said allegation made against the manufacturer of inputs.
It was a numberification pertaining to exemption of alcohol falling under item 15 A of the First Schedule to the Central Excises and Salt Act, 1944 and manufactured from vinyl acetate monomer, from so much of the duty of excise leviable thereon under the said Act at the rate specified in the First Schedule, as in excess of the amount calculated at the rate of 10 ad valorem.
Being aggrieved by the aforesaid order the respondent preferred an appeal before the Commissioner Appeals , Central Excise, Jalandhar, who ruled that the credit of deemed duty paid by the manufacturer under Section 3A of the Central Excise Act, 1944, for brevity the Act was available subject to the companydition that the inputs were received directly from the factory of manufacturer under companyer of an invoice declaring therein that the appropriate duty of excise had been paid on such inputs under the provisions of the Act.
58/97 CE NT dated 30.8.1997 and the aforesaid opinion of the Competent Authority persuaded him to issue a show cause numberice on 19.1.2001 proposing recovery of deemed MODVAT credit of Rs.77,546/ and imposition of penalty.
Expressing such an opinion, it companycurred with the view taken by the adjudicating authority.
During MODVAT verification it was found that the supplier of inputs had number discharged full duty liability for the period companyered by the invoices.
The appellate authority referred to the provisions of sub rule 6 of Rule 57A and numberification No.
65 of 2006 before the High Court.
The appellate authority observed that unless and until payment of appropriate duty had been made, the assessee companyld number have availed the benefit.
The High Court reproduced the proposed substantial question of law which reads as follows Whether the manufacturer of final products is entitled to deemed credit, under Notification 58/97 CE dated 30.8.97 when the manufacturer supplier of inputs has number paid Central Excise Duty and given a wrong certificate on the body of invoices about duty dischargement under Rule 96ZP of Central Excise Rules, 1944?
185 of 1983.
However, it reduced the penalty from Rs.40,000/ to Rs.20,000/ .
For the sake of companyvenience the facts from Civil Appeal No.
Hence, the present appeal by the Revenue.
26499 of 2008.
Questioning the justifiability of the aforesaid order, Revenue preferred Civil Appeal No.
The unsuccess in appeal companypelled the respondent to prefer Appeal No.
7031 of 2009 are set out herein.
The companytroversy that emerges for companysideration in this batch of appeals, being companysubstantial, was heard together and is disposed of by a companymon judgment.
The respondent company availed deemed MODVAT credit of Rs.77,546/ during the quarter of March, 2000 on the strength of invoices issued by M s. Sawan Mal Shibhu Mal Steel Re Rolling Mills, Mandi Govindgarh.
E/1474/04 SM before the Customs, Excise and Service Tax Appellate Tribunal for short the tribunal and the tribunal placing reliance on the decision in Vikas Pipes v. CCE1 came to hold that the declaration given by the appellant therein satisfied the companyditions enumerated in the numberification for claiming the deemed MODVAT credit and, accordingly, quashed the orders passed by the adjudicating authority and that of the appellate authority.
Dipak Misra, J. Leave granted in Special Leave Petition C No.
The Competent Authority was of the view that appropriate duty of excise had number been paid by the manufacturer of inputs under the invoices on the strength of which the respondent took the benefit of deemed MODVAT credit and it was obligatory on the part of the respondent to take all reasonable steps to ensure that the appropriate duty of excise had been paid on the inputs used in the manufacture of their final product as required under Rule 57A 6 of the Central Excise Rules, 1944 for short the Rules read with numberification No.
