2005 (5) TMI 446 - AT - Central Excise

Summary

Issues: Modvat credit denial based on endorsed invoices

Analysis:
The judgment revolves around the denial of Modvat credit amounting to Rs. 1,08,861/- to the appellants for inputs procured during a specific period due to the use of endorsed invoices. The Tribunal examined the records and found that the inputs were originally manufactured by a specific company and then sold to the appellants through intermediary parties. The appellants claimed credit based on the endorsed invoices of the manufacturer. The department had raised concerns about the use of invoices from intermediary parties for Modvat purposes. However, the lower authorities denied credit, stating that the endorsed invoices were not valid for Modvat purposes during the relevant period. The Tribunal clarified that while endorsed invoices were not acceptable for Modvat credit during that time, the appellants could have availed credit based on invoices issued directly by their suppliers. It was highlighted that registration with the department for issuing Modvat invoices was not mandatory during the period in question. The Tribunal acknowledged that the appellants had followed the Modvat credit process correctly and noted that a certain amount had already been deposited with the department. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery for the entire duty and penalty amount.

This judgment underscores the importance of adhering to the specific requirements for claiming Modvat credit, emphasizing the need to use valid invoices directly from suppliers rather than endorsed invoices from intermediary parties. It clarifies that during the relevant period, registration with the department for issuing Modvat invoices was not obligatory, and as long as the credit process was followed correctly, denial of credit based on the type of invoice used was deemed inappropriate. The Tribunal's decision to grant waiver of pre-deposit and stay of recovery signifies a fair assessment of the situation, considering the compliance with Modvat credit procedures by the appellants and the amount already deposited with the department.