2001 (8) TMI 255 - AT - Central Excise

Summary

Issues:
- Denial of deemed Modvat credit under Notification No. 58/97-C.E.
- Interpretation of 'appropriate duty' under Para 4 of the notification.
- Discharge of duty liability under Rule 96ZP(3) for deemed Modvat credit.
- Validity of input-manufacturers' certificates for duty payment.
- Central Government's declaration on deemed duty payment for inputs.

Analysis:

The appeal concerns the denial of deemed Modvat credit under Notification No. 58/97-C.E. to the appellant by the Commissioner (Appeals) due to the alleged non-payment of 'appropriate duty' on specified inputs. The dispute revolves around the interpretation of 'appropriate duty' under Para 4 of the notification and the requirement of discharge of duty liability under Rule 96ZP(3) for availing deemed Modvat credit.

The appellant argued that the certificates issued by the Central Excise Range Officer indicated that the duty had been paid under Rule 96ZP(3) by the input-manufacturers, satisfying the condition laid down in Para 4 of the notification. The appellant contended that any short-payment of duty by the input-manufacturers should not be a valid ground for denying the benefit of the notification to manufacturers of final products.

The Tribunal analyzed the invoices issued by the input-manufacturers and found that while one invoice explicitly stated the discharge of duty liability under Rule 96ZP(3), the remaining invoices lacked such a declaration. The Tribunal considered the Central Government's declaration in Para 2 of the notification that the duty of excise shall be deemed to have been paid on the inputs declared therein, emphasizing that any denial of deemed Modvat credit based on the absence of input-manufacturers' declaration in Para 4 would contradict the substantive provision of Para 2.

Ultimately, the Tribunal ruled in favor of the appellant, allowing the deemed Modvat credits taken on the invoices, including the one with a clear declaration of duty discharge under Rule 96ZP(3). The impugned order was set aside, and the appeal was allowed, emphasizing the significance of the Central Government's declaration regarding deemed duty payment for inputs.