2004 (2) TMI 533 - AT - Central Excise

Summary

Issues:
Dispute over availment of Modvat credit against certain invoices made ineligible by Rule 57G amendments.

Analysis:
The dispute in this appeal revolves around the availment of Modvat credit against invoices affected by amendments to Rule 57G of the Central Excise Rules, 1944. The appellants argue that the invoices they are claiming credit for are not ineligible, contrary to the view held by the Departmental authorities, leading to the appeal.

The proviso to Rule 57G(2)(i) specifies duty paying documents against which credit can be claimed, with relevant entries at serial Nos. (e) to (g) being crucial. These entries include invoices issued by the 1st stage dealer, 2nd stage dealer, and by a dealer before August 31, 1996. Sub-clause (ii) further restricts the credit for invoices mentioned in sub-clause (g) to be taken only until September 30, 1996.

Upon reviewing the order-in-original, it is noted that the adjudicating authority concluded that invoices issued by dealers before September 1, 1996, are only valid for availing Modvat credit until September 30, 1996. However, the order-in-appeal introduces new grounds not mentioned in the show cause notice, deviating from the original findings.

A detailed analysis of the rules reveals that the ineligibility specified under sub-clause (g) applies only to dealer's invoices other than those mentioned in sub-clauses (e) and (f) related to first and second stage dealers. This interpretation implies that only 3rd stage dealer's invoices became ineligible from September 1, 1996. Since the disputed invoices were issued by importers, they do not fall under the ineligibility criteria of sub-clause (g).

Based on the above analysis, it is evident that the lower authority misinterpreted the rules, leading to the incorrect conclusion that all types of dealer's invoices became ineligible. Consequently, the orders of the lower authority are set aside, and the appeal of the appellants is allowed, with any consequential reliefs to be granted in accordance with the law.