2015 (3) TMI 1089 - AT - Central Excise

Disallowance of MODVAT Credit - appellant has availed credit in RG 23A Part-II on the basis of subsidiary GP-1 (gate pass) at a date prior to the issue of said subsidiary GP-1 - Held that - Subsidiary GP-1 were issued on 23.02.1992 03.03.1992 and 03.04.1992 and the credit there against was taken in RG 23A Part-II on 14.03.1992 18.03.1992 and 18.04.1992 respectively. Therefore the allegation of the Revenue is apparently wrong on the face of the record. As regard the credit amount of 31, 087.30 availed as deemed credit on copper wire on going through the invoice it was observed that the supplier has sold the material to the appellant under description of cable (copper wire) GR-8647 and under chapter heading 74.08 From the said description it is clear that even though the appellant treated the said copper material as waste therefore I uphold the denial of MODVAT credit. Even if GP-1 was not endorsed in favour of the appellant but if input covered under the said GP-1 was received in the factory account for the same in records purchases were booked in the name of the appellant and payment their against was made by the appellant these are satisfactory evidences to established that the inputs covered under the said unendorsed GP-I were received by the appellant and used in the manufacture. However from the proceeding it is observed that such examination were not carried out therefore I am of the opinion that for the purpose of this verification the matter should be remanded to the original adjudicating authority to decide a fresh the eligibility of MODVAT credit. Appellant in RG 23A part-II but no accounting of the material have been made in RG 23A Part-I I am of the view that this is only technical lapse. The lower authorities have not disputed the receipt of the input and use thereafter in the manufacture of final product. The entry in RG 23 A Part-1 is only to show the receipt of input but if the receipt is otherwise not under dispute merely because entry was not made in RG 23 A Part-1 MODVAT credit can not be denied. When the input was cleared admittedly no GP-I was issued however the GP-I issued at a later date. This shows that the input was received by the appellant but no GP-I was received of that material at the relevant time. It was statutory provisions that goods cannot be cleared out of the factory without issue of GP-1 and debit of duty either in Profit & Loss Account or in MODVAT account. Therefore I am of the view that GP-1 of a later date cannot be considered as a duty paying document in respect of input cleared from the supplier and received by the appellant prior to the date of GP-1 - Appeal disposed of.

Summary

Issues:
1. Disallowance of MODVAT credit by lower authority.
2. Grounds for disallowance of credit.
3. Appeal filed by the appellant against Order-in-Original.
4. Arguments by appellant's counsel.
5. Revenue's stance.
6. Findings by the Tribunal on each issue.

The judgment pertains to an appeal against the Order-in-Appeal where the Commissioner upheld the disallowance of MODVAT credit by the lower authority. The issues involved include the denial of credit on various grounds: availing credit before duty paying documents were issued, using certified photocopies for credit, claiming deemed credit on copper wire instead of scrap, endorsing GP-1, lack of accounting in RG 23A Part-I, and taking credit before the issuance of GP-1. The appellant argued in favor of each credit disallowed, citing relevant legal precedents and clarifications. The Revenue, represented by the Assistant Commissioner, supported the impugned order's findings.

The Tribunal carefully analyzed each issue raised. Firstly, it allowed the credit of Rs. 56,874.87, rejecting the Revenue's claim that the credit was taken before the issuance of subsidiary GP-1, as the dates of issuance and credit availed were in proper sequence. Secondly, the credit of Rs. 11,880/- based on certified photocopies of GP-1s was allowed, following legal precedents supporting such credits. However, the deemed credit of Rs. 31,087.30 on copper wire was disallowed as the material was sold as wire, not scrap as claimed by the appellant, hence not eligible for deemed credit under relevant notifications.

Regarding the credit of Rs. 2,54,805.77 on unendorsed GP-1, the Tribunal remanded the matter for further verification as satisfactory evidence of receipt and use of inputs was not adequately examined. The technical lapse of not accounting for material in RG 23A Part-I, amounting to Rs. 36.396.03, was considered minor and did not warrant credit denial. However, the credit of Rs. 13,823/- for material entered in RG 23A part-I before the GP-1 issuance was upheld, emphasizing the statutory requirement of GP-1 for duty payment and material clearance.

Ultimately, the Tribunal disposed of the appeal by allowing some credits while upholding the denial of others based on detailed analysis of each issue raised by the appellant and the Revenue. The judgment provided a comprehensive review of the facts and legal arguments, ensuring a fair and thorough consideration of the MODVAT credit disallowance.