2005 (5) TMI 372 - AT - Central Excise

Summary

Issues: Denial of Modvat credit under Rule 57H due to missing duplicate invoices; Imposition of personal penalty on appellants.

Denial of Modvat Credit:
The dispute in the case revolved around the denial of Modvat credit amounting to Rs. 28,394 claimed by the appellants as transitional credit under Rule 57H. The appellants, a re-rolling unit, had opted out of the compounded levy scheme and started availing the Modvat credit for raw materials in their factory. However, the Modvat credit was disallowed as the appellants did not possess duplicate copies of the invoices, even though they had the original invoices. The appellants argued that they were not availing Modvat credit when the raw materials were received, leading to a lack of proper records. They contended that the Modvat credit should be extended based on the original invoices, as there was no dispute regarding the receipt, duty paid status, and utilization of the inputs in their factory. The appellate authority found merit in the appellants' argument, noting that the loss of duplicate copies was not addressed at the time due to not working under the Modvat credit scheme. The imposition of a personal penalty on the appellants for this technicality was deemed unjustified, as no contravention was committed by them. Consequently, the impugned order denying the Modvat credit was set aside, and the appeal was allowed in favor of the appellants.

Imposition of Personal Penalty:
The appellate authority expressed surprise at the imposition of a personal penalty on the appellants in addition to the denial of Modvat credit. It was highlighted that the appellants had lodged a claim for transitional credit under Rule 57H, and if the claim was not admissible, the authorities could deny it without imposing a personal penalty. The authority emphasized that since there was no contravention by the appellants, there was no justification for imposing a personal penalty. Therefore, the imposition of the personal penalty was considered unwarranted, and the appellate authority set aside the impugned order in its entirety, providing consequential relief to the appellants.