2016 (10) TMI 1121 - AT - Central Excise

MODVAT/CENVAT credit - irregular availment - cross utilization of MODVAT against duty paid invoices - Held that - The finding in the impugned order the credit of ₹ 88,182/- is purported on the basis of invalid document appears to be unfounded. There is no dispute against procurement of materials against duty paying invoice No.21538 dated 28.04.1996 which needs to be verified as a valid document. Matter is remanded to the adjudicating authority for verification of the records and to pass order in accordance with law - appeal allowed by way of remand.

Summary

Issues:
1. Alleged irregular availment of MODVAT credit.
2. Dispute regarding cross utilization of MODVAT against duty paid invoices.
3. Confirmation of demand of duty and imposition of penalty.

Analysis:
1. The appellant, engaged in manufacturing various chemicals, procured Soda Ash as an input from a supplier. Due to misplacement of two wagons during transit, the goods were received after continuous follow-up. The appellant availed MODVAT credit on the basis of the invoices for the misplaced wagons. However, a discrepancy arose when the railway authorities confirmed the connection of the wagons to different invoices than initially understood. The appellant rectified the error by canceling the credit against the incorrect invoice and availing the credit against the correct invoice upon actual receipt of the goods. The issue revolved around the factual aspect of cross-utilization of MODVAT against duty paid invoices. The appellate authority found the basis of the demand for duty and penalty to be unfounded and remanded the matter for verification of records by the adjudicating authority.

2. The appellant contended that they had a bona fide belief regarding the misplaced wagons and the subsequent correction of the MODVAT credit entries upon clarification from the railway authorities. The appellant argued that the impugned order's finding of an invalid document for availing the credit was not substantiated. The appellant emphasized the need to verify the validity of the duty paying invoice against which the materials were procured. The appellate tribunal, considering the submissions, set aside the confirmation of the demand for duty and the penalty, remanding the case for further examination by the adjudicating authority to ensure a lawful decision with proper hearing opportunity provided.

3. In conclusion, the appellate tribunal allowed the appeal by way of remand, directing the adjudicating authority to reevaluate the records and issue a fresh order in compliance with the law. The importance of granting a fair hearing before the order was emphasized. The decision highlighted the significance of verifying the validity of documents and ensuring accurate utilization of MODVAT credits in line with legal requirements. The judgment aimed to rectify the discrepancies in the initial order and provide a just resolution to the dispute over the alleged irregular availment of MODVAT credit and the imposition of penalty.