2010 (6) TMI 394 - AT - Central Excise

Cenvat credit Inputs from non-registered dealers - input received by the appellant were not duty paid or were not received by them or do not stand utilized in the manufacture of final product - denial of credit on the irregularities treated as technical, neither justified nor warranted

Summary

Issues:
1. Denial of Modvat credit due to non-registration of the dealer supplying raw material.
2. Validity of denial of credit based on post-adjudication enquiries.
3. Applicability of the decision in the case of M/s. Vimal Enterprise v. UOI.

Analysis:
1. The appellant's Modvat credit of Rs. 1,19,248/- for July and August 1994 was denied due to the supplying dealer not being registered with the department. The adjudicating authority initially dropped the proceedings as the dealer got registered before 31-12-1994. However, the Commissioner (Appeals) reversed this decision based on departmental verification showing the dealer was not registered.

2. The appellant argued that denial of credit solely based on the dealer's non-registration is not valid, citing the case of M/s. Vimal Enterprise v. UOI. The appellant also highlighted that the dealer was subsequently registered, and the enquiries made by the Commissioner (Appeals) were not shared with them promptly, raising jurisdictional issues regarding the enquiry location.

3. The Revenue contended that registration of the dealer was a prerequisite for credit availment, and since the enquiries confirmed non-registration, the denial was justified. However, the Member (J) found that the credit was availed during the specified period, and the inputs were duly received and utilized in manufacturing, with no issues regarding duty payment.

4. The Member (J) observed that the show cause notice was issued in 1994, and the adjudication occurred around 10 years later, with post-adjudication enquiries revealing discrepancies. The Member agreed with the appellant's advocate that such delayed enquiries might not reflect the accurate situation, especially considering the jurisdictional changes in the Commissionerate.

5. Consequently, the Member (J) set aside the impugned order, allowing the appeal and granting relief to the appellant. The judgment emphasized that denial of credit for technical irregularities, especially after a significant time lapse, was not justified or warranted, leading to a favorable decision for the appellant.