2006 (3) TMI 395 - AT - Central Excise

Summary

Issues:
1. Denial of MODVAT Credit for misdeclaration of goods.
2. Denial of MODVAT Credit for goods purchased from a specific supplier.
3. Reversal of credit amount by the appellants.
4. Disallowance of MODVAT Credit based on technicalities in duty documents.

Analysis:

1. The first issue pertains to the denial of MODVAT Credit amounting to Rs. 19,208.60 due to misdeclaration of goods by the appellants. The Department contended that the goods were not declared correctly as capital goods, leading to the denial of credit. The Tribunal found that the appellants failed to clearly indicate the usage of the goods in their furnace, causing confusion in the Order-in-Original. As the declaration did not specify the usage of the goods, the denial of credit was deemed correct.

2. The second issue involves the denial of MODVAT Credit of Rs. 3,84,918.00 for goods purchased from a specific supplier who allegedly did not debit the duty in their statutory books. The Tribunal reviewed the records and noted that no proceedings were initiated against the supplier after 1997, as per correspondence with the Department officers. Based on this information, the denial of credit was deemed incorrect and unsustainable, leading to the allowance of the appellants' appeal in this regard.

3. The third issue concerns the disallowance of credit amounting to Rs. 1,191.50, which the appellants had already reversed and did not challenge. Consequently, the demand for this amount was upheld by the Tribunal.

4. The final issue relates to the disallowance of MODVAT Credit of Rs. 1,76,811.40, with two contentions raised by the appellants. Firstly, regarding the duty amount of Rs. 77,136.95, the Tribunal found that the denial of credit based on the absence of RG-23D Entry Numbers in the invoices was incorrect as per Notification No. 33/94. Secondly, for the disallowance of credit amounting to Rs. 24,703.45 due to the absence of P.L.A. Debit Entry Numbers, the Tribunal allowed the appeal since there was no dispute regarding the receipt and consumption of the inputs. However, the appellants were only justified in claiming a credit of Rs. 1,01,840.40 out of the total amount, leading to the disallowance of the remaining balance.

In conclusion, the Tribunal set aside the interest imposed under Rule 57-I(5) and the penalty under Rule 173Q of the Central Excise Rules, 1944, due to procedural irregularities. The appellants' appeal was partly allowed based on the detailed analysis and findings for each issue raised in the case.