2003 (6) TMI 418 - AT - Central Excise

Summary

Issues:
1. Validity of Modvat credit based on invoice issued by consignment agent.
2. Authority of consignment agents to issue modvatable invoices.
3. Compliance with Board Circular for verification of invoices and duty-paid character of goods.

Issue 1: Validity of Modvat credit based on invoice issued by consignment agent
The case involved the appellants taking Modvat credit based on an invoice issued by a consignment agent, which the Department sought to disallow. The Assistant Commissioner disallowed the credit and imposed a penalty, which was partially upheld by the Commissioner (Appeals). The Chartered Accountant for the appellants argued that the lower authorities failed to examine the genuineness of the invoice and the duty-paid character of the goods covered, as required by the Board's directives in Circular No. 165/76/95-CX. The Tribunal found that the original authority overlooked the Board Circular and directed a readjudication of the matter, setting aside the previous orders and allowing the appeal by way of remand.

Issue 2: Authority of consignment agents to issue modvatable invoices
The Tribunal examined the Board Circular which recognized consignment agents as authorized to issue modvatable invoices for a specific period. It was noted that the original authority and the Commissioner (Appeals) failed to consider this Circular, which is binding on Departmental authorities. The Tribunal emphasized that the Assistant Commissioner must verify the genuineness of invoices issued by such agents and the duty-paid character of the goods covered. Consequently, the previous orders were set aside, and the case was remanded for readjudication in compliance with the Board Circular.

Issue 3: Compliance with Board Circular for verification of invoices and duty-paid character of goods
The Tribunal highlighted the importance of adhering to the Board Circular, which outlined the procedures for verifying invoices issued by consignment agents and the duty-paid nature of the goods. It was emphasized that such circulars are binding on Departmental authorities, and failure to consider them could lead to erroneous decisions. In this case, the Tribunal found that the authorities did not follow the Circular while disallowing the Modvat credit, leading to the orders being set aside for readjudication in line with the Circular, ensuring a fair opportunity for the assessee to be heard.