Goods used as Input Should be Duty Paid for Availing MODVAT credit u/s 57A of Central Excise Rules : CESTAT [Read Order]

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods used as Input should be duty paid and credit of duty paid on the said goods had not been taken for availing Modified Value Added Tax (MODVAT) credit under section 57A of the Central Excise Rules,1944. 

Khandelwal Laboratories P. Ltd, the application assessee was engaged in the manufacturing of P & P medicines, and at the relevant point of time they were engaged in the manufacture of anti-cancer drugs on behalf of the German Remedies and The name of the said German Remedies was appearing on the Bills of Entry of the imported raw material/input required for manufacturing the aforesaid drug. 

The assessee availed for MODVAT credit and the department denied it on the ground that under Rule 57A of Central Excise Rules for taking Modvat Credit there must require that the duty paying documents of the inputs should be in the name of the assessee who was taking and availing the credit. Thus the assessee filed an appeal against the order passed by the Commissioner of Central Tax (Appeals) for confirming the denial of MODVAT credit. 

Virat Chavda, the counsel for the assessee contended that by holding that Rule 57G of the Central Excise Rules does not require that the bill of entry should be in the name of the person claiming credit of duty and it only required to be established for taking credit was that the goods used as inputs are duty paid and the credit of duty paid on the said goods had not been taken. 

Xavier Mascarenhas, the counsel for the respondent contended that the assessee had taken credit based on the Bills of entry which were not in their name but in the name of German Remedies, and therefore they were not eligible to take the MODVAT credit. 

The bench observed that goods covered with the bills of entry in issue had been received by the assessee and the same were consumed in their manufacturing premises. Thus the assessee was eligible to avail of the MODVAT Credit. 

A single-member bench comprising Ajay Sharma (Judicial) held that the Denial of MODVAT credit was not as per the law and was liable to be deleted. 

Additionally, it was held that the goods used as inputs were duty paid and were eligible to take the MODVAT credit while allowing the appeal filed by the assessee. 

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