Case:
Commissioner of Central Excise, Jalandhar v. Kay Kay Industries (SC)
The Department was of the view that appropriate duty of excise had
not 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 company 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
deemed MODVAT credit and it was obligatory on the part of the company 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
Held
by Supreme Court:
1) In this case supplier of inputs
had given declaration indicating that excise duty had been paid on said inputs.
Fact that supplier had not discharged duty was a lapse on part of seller; it
was different and not a condition or rather a precondition postulated in
Notification;
2)
When there was a prescribed procedure and that had been duly followed by the
assessee, it could not be said that the assessee had not taken reasonable steps
as prescribed in notification;
3)
Due care and caution were taken by the assessee and it was not stated by
Department what further care and caution could have been taken. Requirement of
"reasonable care" does not mean verification from department whether
duty stands paid by supplier because that would be travelling beyond
notification and practically impossible and would lead to transactions getting
delayed;
4) Thus, the Assessee was entitled to deemed
credit under the Notification No. 58/97-CE(NT).
Rahul Jain
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