2006 (2) TMI 346 - AT - Central Excise

Summary

Issues involved: Appeal against denial of Modvat credit based on lost duplicate copy of invoice.

Detailed Analysis:

1. Issue of Modvat credit denial: The appellant took Modvat credit based on the original invoice as the duplicate copy meant for the transport carrier was lost. The adjudicating authority confirmed the demand and imposed a penalty, which was upheld on appeal. The appellate authority remanded the matter for verification of duty paying nature, but the demand was confirmed again. The main contention was the denial of credit due to the absence of FIR and affidavit regarding the lost duplicate copy.

2. Non-application of mind: The advocate argued that the adjudicating authority's second order indicated a lack of consideration and that the appellate authority did not review the facts properly. It was highlighted that the order was passed without following higher appellate authority's instructions.

3. Proper procedure for availing credit: The Departmental Representative emphasized that the proper procedure, including filing an FIR and providing an affidavit about the lost duplicate copy, should have been followed to avail the credit based on the original invoice. Failure to adhere to these requirements was cited as a reason for denying the credit.

4. Verification of duty paying nature: The records showed that the appellant had informed the Assistant Commissioner about the lost duplicate copy and sought permission to avail credit on the original invoice. However, the Revenue authorities did not guide the appellant on the necessary steps to take. It was noted that the Revenue's inaction and failure to respond appropriately led to the denial of credit, which was deemed objectionable.

5. Failure to follow proper procedure: The Assistant Commissioner's office had requested verification of the duty paying nature of the invoice from the originating Range, but the request remained unanswered. The adjudicating authority's adverse inference based on this issue was considered incorrect. It was argued that the failure to obtain information from the originating Range should not be the sole reason for denying the Modvat credit, especially when the appellant had sought permission as per the Board's circular.

6. Precedent and decision: Referring to a previous case, it was established that when the duplicate copy of the invoice is lost, the Assistant Collector should inquire about the duty paying character of the consignment before allowing or disallowing Modvat credit. The decision in this case aligned with the appellant's situation, and it was concluded that remanding the matter again for the same reason would serve no purpose.

7. Final decision: Considering the facts and circumstances, the order in appeal was set aside, and the appeal was allowed. The judgment highlighted the Revenue's failure to guide the appellant properly and the incorrect denial of legitimate credit based on procedural lapses.

This comprehensive analysis of the judgment showcases the key legal arguments, procedural aspects, and the reasoning behind the decision to allow the appeal against the denial of Modvat credit.