2003 (9) TMI 574 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit by Assistant Collector Central Excise Dn. Bombay-II based on unavailability of inputs for physical verification and credit already utilized. Commissioner's grounds for denial based on failure to give intimation of incidence within time limit, utilization of inputs before physical verification, and non-availability of inputs for verification. Interpretation of sub-rule (2A) of Rule 57G regarding taking credit against original invoices when duplicate copy is lost.

Analysis:
The appeal was filed against the order-in-appeal by the Commissioner of Central Excise, Mumbai-II, upholding the denial of Modvat credit amounting to Rs. 1,24,004/- by the Assistant Collector Central Excise Dn. Bombay-II. The denial was initially based on the unavailability of inputs for physical verification and the fact that the credit had already been utilized by the appellants. However, during the hearing, it was revealed that the appellants had requested permission to take Modvat credit on original invoices due to the loss of duplicate transporters' copies, as evidenced by letters dated 31st August and 10th October 1994. Despite no response from the authorities, the appellants proceeded to use the credit and material.

The Commissioner's order introduced additional grounds for denial, including the failure to provide timely intimation of the incident to the jurisdictional authorities as required by the Central Excise Rules, 1944, and the utilization of inputs before a physical verification visit by Central Excise Officers. The Commissioner emphasized that proper procedures were not followed, and the inputs were not available for physical verification.

During the hearing, the appellants argued that they had followed the necessary procedures and had waited before utilizing the credit and material. They highlighted sub-rule (2A) of Rule 57G, which allows for credit against original invoices when the duplicate copy is lost, subject to the Assistant Commissioner's satisfaction. Since there was no adverse finding regarding the loss of duplicate copies, the Assistant Collector's denial of credit on other grounds not specified in the law was deemed unjustified.

Ultimately, the Tribunal found that the denial of credit by both the Commissioner (Appeals) and the Assistant Commissioner was not sustainable in light of the explicit provision in sub-rule (2A) of Rule 57G. Consequently, the impugned order-in-appeal and order-in-original were set aside, and the appeal was allowed with consequential relief.