2009 (4) TMI 711 - AT - Central Excise

Summary

Issues: Appeal against impugned order-in-appeal upholding Modvat credit demand of Rs. 9384 based on invoices issued by the Appellant to themselves.

Analysis:
1. The appeal was filed against the order-in-appeal upholding the Modvat credit demand of Rs. 9384, which was based on invoices issued by the Appellant to themselves. The Appellant requested a hearing on merit, and the matter was considered by the Tribunal.

2. The Department disallowed the credit of Rs. 9384, stating that the duty pertained to yarn cleared by the Appellant under their own invoices to a job worker for dyeing. The dyed yarn was then returned and used by the Appellant in the packing section. The consignee was mentioned as "U.P. State Spg. Co. Ltd., Store Deptt." The Department argued that since the invoices were issued by the Appellant to themselves, they were not valid documents for Cenvat credit under sub-rule (2) of Rule 57G.

3. The Tribunal carefully considered the submissions and records. It noted that the only ground for denying the credit was the issuance of invoices to self, which, according to sub-rule (3) of Rule 57G, were deemed invalid for Modvat credit. However, under sub-rule (2) of Rule 57G, any invoice issued by the manufacturer under Central Excise Rules, 1944, is considered a valid duty paying document. There was no provision explicitly stating that invoices issued by a manufacturer to themselves for captive consumption or packing were invalid for Modvat credit. Therefore, the Tribunal held that the denial of Modvat credit amounting to Rs. 9384 was not sustainable. The impugned order was set aside, and the appeal was allowed.

Conclusion:
The Tribunal ruled in favor of the Appellant, setting aside the order-in-appeal that upheld the Modvat credit demand of Rs. 9384. The Tribunal clarified that invoices issued by the manufacturer to themselves for captive consumption or packing were valid documents for taking Modvat credit, as per the provisions of Rule 57G.