2006 (1) TMI 363 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on capital goods and inputs.
2. Consideration of submissions made by both parties.
3. Validity of duty paying documents addressed to the head office.
4. Amendments to Rule 57G and Rule 57T.
5. Compliance with Circular No. 441/99.

Analysis:

The appeal was filed against the Order-in-Appeal dated 12-9-2003 upholding the denial of Modvat credit on capital goods and inputs as per the Order-in-Original dated 15-5-2000. The Consultant for the appellants argued that they had evidence to prove receipt and consumption of inputs, as well as receipt and installation of capital goods in the factory. It was contended that the appellate authority did not consider their submissions or case law presented, leading to the dismissal of the appeal.

The learned D.R. reiterated the findings of the adjudicating authority but acknowledged that the appellate authority did not adequately consider the detailed submissions made by the appellants. The Tribunal reviewed the show cause notice which raised three main charges for denying Modvat credit: delayed filing of declarations, duty paying documents not in the manufacturer's name, and credit sought not falling under the definition of capital goods and inputs. It was noted that duty paying documents addressed to the appellants' head office were valid for credit at the factory, subject to proper endorsement by the head office.

The Tribunal highlighted the amendments to Rule 57G and Rule 57T through Notification No. 7/99-C.E. (N.T.), empowering the Asst. Commissioner/Dy Commissioner to condone procedural irregularities and allow credit. Circular No. 441/99 by C.B.E.C. clarified that pending issues related to procedural infractions should be decided following the circular. The Tribunal found that the Order-in-Original and Order-in-Appeal did not consider these amendments despite being in effect during the adjudication and appellate proceedings.

Given the clear direction provided by Circular No. 441 to the jurisdictional Asst. Commissioner and Dy. Commissioner regarding procedural violations, the Tribunal set aside the Order-in-Appeal dated 12-9-2003. The matter was remanded back to the original adjudicating authority to reconsider in light of the Rule amendments and Circular. The appellants were granted the opportunity to present all relevant documents, and the adjudicating authority was instructed to follow principles of natural justice in deciding the issue. The appeal was allowed by way of remand, emphasizing compliance with the procedural requirements.