2003 (7) TMI 457 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit in respect of 51 invoices for the period April 1995 to June 1995.

The judgment involves a dispute regarding the disallowance of Modvat credit in connection with 51 invoices for a specific period. Initially, the credit was disallowed by the Assistant Commissioner on 47 invoices due to lack of pre-authentication by the manufacturer or input supplier. Furthermore, out of these 47 invoices, 3 were additionally disputed for not being marked as 'original for buyer, duplicate for transporter', while 4 invoices were disallowed for not being properly marked as 'duplicate for transporter copy'. The Commissioner (Appeals) allowed the appeal, stating that pre-authentication is a procedural defect that can be rectified by the assessee, directing the Revenue to return the invoices for correction. The Commissioner observed that the invoices were adequately marked as 'duplicate' and directed the Asst. Commr. to verify and allow credit for those marked as 'original customer copy (to use for Modvat)'.

The respondents relied on various Tribunal decisions to argue that non-preauthentication of invoices was a rectifiable defect and should not lead to credit disallowance. They also contended that the invoices clearly indicated their status as 'duplicate', and the presence of additional printed expressions should not be a basis for denial of credit. Reference was made to Notification No. 77/99-C.E. (N.T.) and Circular No. 441/7/99-CX, emphasizing that Modvat credit should not be disallowed on procedural grounds. The Tribunal noted that there was no dispute regarding the duty paid character of the inputs, their receipt, and utilization in manufacturing the final product. The Tribunal held that non-preauthentication is a rectifiable defect, and the amendments to Rule 57G clarified that minor lapses should not be a reason to deny credit. The Board's circular and the decision in Kamakhya Steels Pvt. Ltd. v. CCE were cited to support the position that procedural objections raised by the Revenue should not result in credit denial, especially when the invoices clearly indicated 'duplicate'. Consequently, the Tribunal upheld the Commissioner (Appeals) order, rejecting the Revenue's appeal.