2002 (12) TMI 487 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat credit on lubricating oils purchased from a Public Sector Undertaking not registered under specific Central Excise Rules.

Analysis:
The appellants were availing Modvat credit facilities but received a show cause notice questioning their eligibility for Modvat credit on lubricating oils purchased from a Public Sector Undertaking (M/s. Indian Oil Corporation Ltd.) not registered under Rule 57G read with Rule 57GG of the Central Excise Rules, 1944. The matter proceeded despite the absence of the appellants, with the Departmental Representative presenting the case. The Tribunal examined the records and found that M/s. IOC Ltd., being a Public Sector Undertaking, declared their Depot as per Section 4 of the Central Excise Rules and were registered under Rule 174 as a Warehouse. The lubricating oils were manufactured by M/s. IOC Ltd., duty was paid, and the goods were sent to the Depot, which was registered under relevant provisions. The Tribunal referred to instructions stating that invoices/certificates from Public Sector Undertakings should be accepted as proof of duty payment for Modvat credit purposes. It was emphasized that if M/s. IOC Ltd. had not obtained registration and issued duty paid invoices, they should be penalized, but the denial of Modvat credit to the appellants, who had valid invoices, was unwarranted.

The Tribunal further noted that Rule 174 required registration for a Warehouse, which M/s. IOC Ltd. claimed to have obtained. Rule 57G 3(b) allowed credit on invoices issued to a manufacturer from a registered Depot/Warehouse. The Tribunal questioned the initiation of proceedings against the appellants, highlighting the failure to follow Board instructions and relevant case law. Consequently, the Tribunal set aside the order and allowed the appeal, emphasizing the compliance of the appellants with the necessary documentation and the lack of valid reasons for denying them Modvat credit. The decision was pronounced in court on 26th December, 2002, in favor of the appellants.