2005 (7) TMI 598 - AT - Central Excise

Summary

Issues: Modvat credit disallowed, Personal penalty imposed, Limitation period for demand

Modvat Credit Disallowed:
The appellants' Modvat credit of Rs. 52,000 was disallowed due to the invoice being whitened and the appellant's name being rewritten on it. The appellants clarified that the capital goods covered by the invoice were intended for their job worker, leading to the supplier making an invoice in the job worker's name initially. However, upon realizing the error, the appellant's name was written on the invoice. The Revenue objected, stating that the moulds were not actually received at the appellant's factory but were sent directly to the job worker, thus questioning the entitlement to claim the Modvat credit.

Personal Penalty Imposed:
In addition to disallowing the Modvat credit, a personal penalty of Rs. 50,000 was imposed on the appellants. The penalty was likely related to the discrepancies and issues surrounding the Modvat credit claim and the defaced invoice.

Limitation Period for Demand:
Apart from the merit-based challenges, the demand was also contested on the grounds of limitation. The appellants argued that all relevant facts were disclosed to the Central Excise authorities before the defaced invoice was used to claim credit. The Show Cause Notice was issued more than two years after the incident, raising concerns about the demand being time-barred.

Analysis and Decision:
The appellants initially declared their intention to avail credit for capital goods and later sought condonation for delay in filing the declaration. The Superintendent confirmed the permission to avail credit for duty-paid goods, and the disputed invoice was defaced when the Modvat credit was taken. The Show Cause Notice was issued well beyond the normal limitation period. The Tribunal found that the demand was primarily based on the defaced invoice, which was known to the authorities when the credit was initially allowed. The Tribunal concluded that the demand was significantly time-barred, as the issue could have been addressed in 1997 itself. Consequently, the Tribunal set aside the confirmed demand and penalty, ruling in favor of the appellants solely on the grounds of limitation, without delving into the merits of the case.

This detailed analysis covers the issues of Modvat credit disallowance, personal penalty imposition, and the limitation period for the demand, highlighting the arguments presented, the decision rendered, and the key considerations leading to the Tribunal's ruling in this case.