Case Note & Summary
The Commissioner of Central Excise, Goa, filed four appeals against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which had dismissed the Revenue's appeals. The common question was whether Modvat credit could be denied at the destination (Goa) on the ground that the excise duty paid at the place of job work (outside Goa) was not legally payable. The facts were that job works were undertaken outside Goa, excise duty was paid on the goods before removal, and the goods were brought to Goa where the factory owners sought Modvat credit. The Revenue denied credit arguing that job work does not attract duty. The Tribunal relied on the CEGAT decision in Owens Bilt Ltd. v. Commissioner of Central Excise, Pune (1998 (101) ELT 642) and dismissed the appeals. The High Court re-framed the question and heard arguments. The Assistant Solicitor General for the appellant argued that duty must be validly collected at the earlier stage for credit to be available. The Court, however, dismissed the appeals, holding that the issue was covered by the Owens Bilt decision and that the Revenue could not deny credit on the basis that duty was not payable at the originating place.
Headnote
A) Excise Law - Modvat Credit - Denial of Credit - Duty Paid at Place of Job Work - The issue was whether the Revenue at the destination can deny Modvat credit on the ground that the duty paid at the place of job work was not legally payable. The Court held that once duty has been paid and the goods are brought to the factory for further manufacture, the assessee is entitled to credit; the Revenue cannot re-open the assessment at the originating end. (Paras 2-5)
Issue of Consideration
Whether the authorities at place 'B' can deny Modvat credit on the ground that no duty was payable at place 'A', when excise duty was levied and paid at place 'A' on job work.
Final Decision
The High Court dismissed all the appeals, upholding the CESTAT order and confirming that the assessees are entitled to Modvat credit.
Law Points
- Modvat credit cannot be denied on the ground that duty was not payable at the place of removal if duty has actually been paid and the goods are used in further manufacture
- principle of unjust enrichment
- finality of assessment at the originating end
Case Details
2011 LawText (BOM) (06) 186
Excise Appeal No. 4/2005 with Excise Appeal No. 1/2005 with Excise Appeal No. 2/2005 with Excise Appeal No. 5/2005
Mr. C.A. Ferreira, Assistant Solicitor General for the Appellant; Mr. S. Naik, Advocate for the Respondent (in Excise Appeal No. 4/2005); Mr. Sudin Usgaonkar, Advocate for the Respondent (in Excise Appeal Nos. 1, 2, 5/2005)
The Commissioner, Central Excise Goa
M/s. Nestle India Ltd. (in Excise Appeal No. 4/2005) and M/s. MRF Ltd. (in Excise Appeal Nos. 1, 2, 5/2005)
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Nature of Litigation
Appeals by the Revenue against the order of CESTAT dismissing the Revenue's appeals regarding denial of Modvat credit.
Remedy Sought
The Revenue sought to deny Modvat credit to the respondents on the ground that duty paid at the place of job work was not legally payable.
Filing Reason
The Revenue challenged the CESTAT order which allowed Modvat credit to the assessees.
Previous Decisions
CESTAT dismissed the Revenue's appeals relying on the CEGAT decision in Owens Bilt Ltd. v. Commissioner of Central Excise, Pune.
Issues
Whether Modvat credit can be denied at the destination on the ground that duty was not payable at the place of job work.
Submissions/Arguments
Mr. Ferreira, learned Assistant Solicitor General for the appellant, submitted that duty must be validly collected at an earlier stage for Modvat credit to be available; in this case, duty was not payable at all on job work.
Ratio Decidendi
Once excise duty has been paid on goods at the place of removal, the authorities at the destination cannot deny Modvat credit on the ground that the duty was not legally payable; the assessment at the originating end is final and cannot be re-opened by the Revenue at the destination.
Judgment Excerpts
A common question is involved in all these appeals. The question is whether; if, excise duty is levied on an assessee at place 'A' and Modvat credit is sought to be availed of at place 'B', it is open to the Authorities at place 'B' to deny credit on the ground that no duty was payable at place 'A'.
The common facts are that job works were undertaken at one place outside Goa and excise duty was paid on the goods before removing them from that place.
Procedural History
The Revenue filed appeals before CESTAT against the denial of Modvat credit; CESTAT dismissed the appeals relying on Owens Bilt Ltd. v. Commissioner of Central Excise, Pune. The Revenue then filed the present appeals before the High Court of Bombay at Goa.
Acts & Sections
- Central Excise Act, 1944:
- Central Excise Rules, 1944:
