2006 (12) TMI 421 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit for invoices issued by unregistered dealers before a specified date.

Analysis:
The main issue in this case revolved around the denial of Modvat credit for invoices issued by dealers who were not registered with the department before a specific date. The appellant argued that the dealer, M/s. Cast Iron Syndicate, issued invoices on 18-7-94 and 19-7-94, while the requirement for Central Excise registration was effective from 4-7-94, which the dealer was unaware of. The appellant contended that the credit based on dealer's invoices should not be denied due to the dealer's lack of registration, as it was a procedural requirement and not under the assessee's control.

The appellant cited various case laws to support their argument, emphasizing that the registration of dealers for claiming Modvat credit was a procedural matter. However, the respondent, relying on the decision of the Larger Bench in Balmer Lawrie & Co. Ltd. v. CCE, Kanpur, argued that dealer registration was a mandatory requirement under Rule 57GG of Central Excise Rules, 1944, and not merely a procedural issue. The respondent also pointed out that the dealer in question was not registered even after 31-12-94, further supporting the denial of the appeal.

The appellant further referenced the judgment of the Hon'ble Gujarat High Court in Vimal Enterprises v. Union of India, which held that Cenvat/Modvat credit should not be denied for faults the assessee was not responsible for. However, the tribunal found that the dealer in this case had not applied for registration at any point, leading to the conclusion that the dealer's failure to apply for registration could not be excused on the grounds of ignorance of the law.

Ultimately, the tribunal upheld the impugned order, rejecting the appeal on the basis that the dealer did not apply for registration at any point, rendering the judgment of the Hon'ble Gujarat High Court inapplicable to the circumstances of this case. The tribunal held that the dealer's failure to apply for registration could not be justified, and therefore, the denial of Modvat credit was upheld.

In conclusion, the judgment centered on the requirement of dealer registration for claiming Modvat credit, with the tribunal emphasizing the mandatory nature of this requirement and the consequences of non-compliance, ultimately leading to the rejection of the appellant's appeal.