2009 (1) TMI 554 - AT - Central Excise

Cenvat/Modvat - Duty paying documents - Held that - the duty paid by the manufacturing unit was admittedly available as credit to its sister unit to whom the goods were being cleared. In this scenario, there could be no motive on the part of manufacturing unit to undervalue the goods and to pay less duty - The fact of non-initiating the proceedings against the manufacturing unit also supports the appellants case that the Revenue never alleged any suppression on manufacturing unit. As such, the supplementary invoices which were issued by the manufacturing unit cannot be held to be result of any suppression on the part of manufacturing unit, so as to make the appellant disentitled to the credit of the duty paid on the said invoices - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Modvat credit based on supplementary invoices issued by a sister unit.
2. Discrepancy in assessable value leading to differential duty payment.
3. Discrepancy in treatment of similar cases by the Revenue.
4. Allegation of suppression at the manufacturer's end.
5. Validity of supplementary invoices for availing credit.
6. Legal understanding and bona fide belief of the manufacturer.
7. Mala fide intention in the adoption of assessable value.
8. Utilization of excess credit by the appellant.
9. Lack of proceedings against the manufacturing unit for alleged suppression.

Analysis:
1. The appellants were denied Modvat credit based on supplementary invoices from their sister unit. The sister unit in Wasim issued these invoices for clearances to other sister units. The manufacturing unit revised the cost of raw material, leading to a higher assessable value and differential duty payment, which the sister units utilized for Modvat credit.

2. While similar proceedings against other sister units were dropped, the current case faced denial of credit due to alleged suppression at the manufacturer's end. The adjudicating authority and Commissioner upheld this decision based on Rule 7(1)(b) of the Cenvat Credit Rules, deeming the supplementary invoices invalid for credit.

3. The appellant argued against suppression, citing the acceptance of identical invoices in other cases and the absence of proceedings against the manufacturing unit. The Revenue claimed mala fide intention due to the incorrect assessable value adoption, not rectified suo motu by the manufacturer.

4. The Tribunal found no motive for undervaluation as the duty paid was available as credit to the sister unit. Given the dropped proceedings in similar cases and the appellant's use of excess credit from the PLA, the Tribunal concluded no suppression by the manufacturer, overturning the denial of credit based on the supplementary invoices.

5. The Tribunal emphasized the lack of allegations or penal actions against the manufacturing unit, supporting the appellant's position. It ruled in favor of the appellant, setting aside the impugned order and allowing the appeals with consequential relief, highlighting the Revenue's inconsistent treatment and the absence of suppression by the manufacturer.