2004 (3) TMI 631 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on invoices issued by a registered dealer, affirmation of penalty by the Commissioner (Appeals), prayer for setting aside the penalty based on lack of knowledge regarding dealer's registration status.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI concerned the denial of Modvat credit amounting to Rs. 80,034.64 to the appellants on invoices issued by a registered dealer. The Commissioner (Appeals) disallowed the credit and upheld the penalty of Rs. 15,000. The appellants, through their Counsel, sought the setting aside of the penalty on the grounds that they were unaware of the dealer's registration status before the specified deadline of December 31, 1994.

Upon review, the Tribunal noted that the appellants had received the goods based on invoices issued prior to December 31, 1994, with the dealer having issued the invoices in July 1994. There was no evidence to suggest that the appellants were aware at the time of purchase that the dealer would not register by the stipulated deadline. Furthermore, there was no indication that the appellants had influenced the dealer's decision not to register. The Tribunal found the appellants to be genuine purchasers acting in good faith based on valid documents at the time of purchase.

Considering the circumstances, the Tribunal concluded that the appellants should not be penalized for the dealer's failure to register with the Central Excise authorities before the deadline. As a result, the penalty imposed on the appellants was set aside. However, the Tribunal maintained the decision to deny Modvat credit to the appellants as per the impugned order. The appeal was thus disposed of with the modification of setting aside the penalty while upholding the denial of Modvat credit to the appellants.