ORDER
K.D. Mankar, Member (T)
1. The appeal of the appellants is directed against the order-in- appeal passed by the Commissioner (Appeals). In the said order claim for modvat credit in respect of certain inputs was dis-allowed on the ground that documents on the basis of which the credit has been taken are not received from any external sources. Instead the said documents are internal challans/documents on the basis of which the credit has been taken. In the appeal before the Tribunal, it is claimed that, the duty paying documents were received by the appellants in respect of the whole quantity. Being common inputs for more than one final product, credit was taken initially for the entire quantity against final product of one chapter. The appellants manufactured goods falling under Chapter 29 as well as Chapter 30. Therefore, when inputs like sugar was received in bulk, its entry is allocated in respect of the finished goods of Chapter 29, though a part of the quantity may go for manufacture of finished goods falling under Chapter 30. To the extent the quantity which goes for manufacture of final goods, which fall in a chapter which is different from the chapter against which the entire stock is recorded, an internal document is generated to apportion the duty credit on this split quantity (based on the parent duty paying document) and then the credit is accordingly taken in the register for payment of duty on that final product.
2. In other words, it is claimed by the appellants that, the internal documents are not independent of the duty paying documents on the basis of which the credit has been taken. Credit taken in respect of the said inputs is covered by the supplier’s duty paying documents. Internal documents allocating the credit for the split quantity used in the manufacture of goods falling under chapter other than the chapter originally indicated at the time of receipt of the inputs, cannot therefore be considered as a separate duty paying documents. Since the credit is covered for the full quantity, with reference to the duty paying documents of the supplier, the lower authorities were in error in disallowing the credit.
3. Heard both sides.
4. On considering the submission, I find that the records in the appeal papers are not sufficient to arrive at a conclusion as to whether internal documents are mere off springs of the parent duty paying documents received from the suppliers in respect of the entire quantity of inputs. If that be so, the credit cannot be denied. However, the matter is required to be examined by the original authority viz., Deputy Commissioner of Central Excise. Accordingly, the orders of the lower authorities are set aside and the appeal allowed by way of denovo remand to the Assistant Commissioner to verify the aspects as discussed above and pass fresh orders within three months from the date of this order after following principles of natural justice.
5. Appeal of the appellants is allowed by way of denovo remand to the adjudicating authority.
(Operative part pronounced in Court)