CENVAT / MODVAT CREDIT – SHORTAGE OF INPUTS

The High Court of Judicature at Madras, while deciding R.C.F. No. 11 of 2004 on 28/02/2008, in re : ASCO (INDIA) LTD. Vs CEGAT CHENNAI observed as follows : -

QUOTE : The officer of the Excise Department conducted a verification of records and found that the petitioner has not reversed the credit availed on the inputs which were declared to be shortages and which were written off in their books for the years 1994-95 to 1998-99 and the value of which was Rs. 13, 36,134.33. According to the Department, if there is any shortfall, the petitioner ought to have intimated to the Department which has not been done and the availed credit should have been reversed which the petitioner failed to do. The petitioner provisionally debited an amount of Rs. 1.50 lakhs on 22/05/1999 towards the short fall of Modvat inputs and undertaken to pay the balance, if any. The petitioner declared the inputs as shortage and written off in the balance sheet. So, that shows that the goods are not available and it has not been used for in or in relation to manufacture of any excisable goods. Rule 57 I provides for recovery of credit wrongly availed or utilized in irregular manner. Hence, in respect of the goods which are found shortage and written off in the books of account on which credit has been taken, is sought to be reversed and in default of the same, penal consequences are taken against the petitioner. In the above said factual circumstances of the case, we do not find any question of law so as to direct the Tribunal to draw a statement of facts and refer the question to the High Court for resolution. UNQUOTE.

[for full text of the judgement, please visit http://www.taxesinindia.com and click on the citation taxind_2008_hc_mad_rcp_11]

HIGH COURT JUDGEMENT

VENKATRAMAN RAGGHUPATHY, Web admin.

HIGH COURT JUDGEMENTS CENVAT, MODVAT, SHORTAGE OF INPUTS

CENTRAL GOVERNMENT ADOPTING SCHIZOPHRENIC APPROACH

The HIGH COURT OF DELHI, while deciding W.P. (C ) No. 10982 of 2006 on 20.03.2009 in re : VIJAY GULATI vs U.O.I. observed as follows : -

QUOTE : Now, the jurisdiction of the Customs authorities vis-à-vis the two sets of foreign exchange – one seized near the Airport and the other seized subsequently was on the basis that they formed part of the same transactions or arose out of the statement recorded in the first seizure. Such being the case and the notices, having been issued as a part of the same investigation process, the Central Government could not have adopted a schizophrenic approach ; on the one hand holding that the confiscation was unauthorized, and on other, upholding the confiscation in the absence of such order in the petitioner’s case. The order no where discloses that insofar as the petitioner is concerned, there was any such determination by the authorities under FEMA or the RBI, as the case may be. Therefore, Central Government has, in the impugned order disclosed an inconsistent and wholly illogical approach in law which can hardly commended by this Court. Having held that Customs authorities lacked jurisdiction to deal with the matter in the absence of a proper determination under the relevant law, the Central Government committed a fatal error of law in not applying the same reasoning to the latter part as far as it concerned the petitioner. The latter part of the order is at odds with the earlier reasoning, and without any rationale. UNQUOTE.

[for full text of the judgement, please visit http://www.taxesinindia.com and click on the citation taxind_2009_hc_del_wpc_10982]

HIGH COURT JUDGEMENT

VENKATRAMAN RAGGHUPATHY, Web admin.

SUPREME COURT JUDGEMENTS confiscation, SCHIZOPHRENIC APPROACH, seizure