2003 (7) TMI 617 - AT - Central Excise

Summary

Issues:
Appeal against adjudication order disallowing Modvat credit and imposing penalties.

Analysis:
The appellants, engaged in manufacturing, appealed against the disallowance of Modvat credit and penalties imposed by the Commissioner of Central Excise. The issue arose when the appellants availed credit on H.R. Coils using invoices issued by their sister concern, which were diverted during transit. The Revenue contended that the appellants wrongly availed credit without following proper procedures.

The appellants argued that the diversion was necessitated as the sister concern did not require the material, and permission was obtained from the Range Supdt. for the diversion. They relied on Circulars issued by the Central Board of Excise & Customs permitting such transit sales. The manufacturer endorsed the invoices allowing the diversion to the appellants.

The Tribunal found that the manufacturer supplied goods to the sister concern, which were then diverted to the appellants with permission from the Range Supdt. The Circulars provided guidelines for such transit sales, allowing diversion upon request. The jurisdictional Supdt. of Central Excise endorsed the diversion, enabling the appellants to avail credit. Consequently, the Tribunal set aside the impugned order, allowing the appeals.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing the validity of the diversion with proper permissions as per Circular guidelines. The judgment highlights the importance of following prescribed procedures in availing Modvat credit and the significance of obtaining necessary approvals for transit sales to prevent disallowance of benefits by the Revenue.