2006 (7) TMI 512 - AT - Central Excise

Summary

Issues:
Wrong availment of Modvat credit based on supplementary invoices.

Analysis:
The issue in this appeal pertains to the incorrect availing of Modvat credit on the basis of supplementary invoices issued. The assessee had taken credit on goods received under supplementary invoices as indicated in the monthly return ER-I for September 2001. The Central Excise officers detected undervaluation of modvatable inputs cleared by the company, leading to deliberate undervaluation without duty payment. The second unit of the company paid differential duty after the offense was discovered. The first unit of the company issued supplementary invoices under Rule 7(1)(b), deemed invalid for Cenvat credit purposes. The investigating authorities and original adjudicating authority found the company engaged in undervaluation with intent to evade duty, a finding unchallenged. The Commissioner (Appeals) erred in deeming the supplementary invoices valid, as the evidence pointed to intentional evasion. Consequently, the appeals filed by the assessee were allowed, with valid grounds identified for the appeal's success.

This judgment highlights the critical aspect of correctly availing Modvat credit and the consequences of using invalid documents for credit purposes. It underscores the duty of manufacturers to comply with excise duty regulations and the severe implications of deliberate undervaluation to evade duty payment. The decision emphasizes the importance of thorough investigation by authorities and the need for appellate bodies to uphold findings supported by evidence. The ruling serves as a reminder of the legal obligations and repercussions faced by entities engaging in fraudulent practices related to duty payments and credit availment.