2012 (7) TMI 3 - AT - Central Excise

Denial of credit - allegation of making the entries in RG 23 A prior to actual receipt of the imported goods - Held that - As all the details were available in the invoices are clearly mentioned credit cannot be denied to the respondents - the goods in question were actually received by the respondents, as was clear from the gate entries and material received notes - in respect of certain entries where the quantity did not tally with the quantity shown in the bill of entry the Deputy Commissioner is directed to allow the credit after verification as the goods were entered in RG I register in different lots. Notification No. 7/99- CE read with Boar s Circular No. 441/7/95 C E dated 23.2.99 was not applicable as issued subsequent to the period involved - Held that - Reading of Board s Circular makes it clear that the credit should not be denied on the technical and procedural violations and wherever there is no dispute about the duty paid character of the goods, their receipt in the assessee s factory and subsequent use in the manufacture of final product, the show cause notices should not be issued for denial of such credit. Admittedly such clarification relate to past period also. No dispute on availability of credit on merits - the Revenue case as projected in the show cause notice was only in respect of procedural violations thus there is no need for verification of the otherwise admissible modvat credit.

Summary

Issues:
1. Allegation of making entries in RG 23 A prior to actual receipt of imported goods.
2. Applicability of Notification No. 7/99-CE (NT) and Board's Circular No. 441/7/99-CX.
3. Denial of credit based on technical and procedural grounds.
4. Remand for verification of certain entries.

Analysis:
1. The first issue revolves around the allegation of making entries in RG 23 A prior to the actual receipt of imported goods. The Commissioner (Appeals) referred to Notification No. 7/99-CE (NT) and Board's Circular No. 441/7/99-CX. The Commissioner observed that all necessary details were available in the invoices, and the goods were actually received by the respondents as evidenced by gate entries and material received notes. The Commissioner held that denial of credit was not justified as there was no dispute regarding the receipt and usage of the goods in question. The Commissioner directed verification of certain entries where the quantity did not match with the bill of entry.

2. The second issue involves the applicability of Notification No. 7/99-CE (NT) and Board's Circular No. 441/7/99-CX. The Revenue contended that these notifications were not applicable to the period in question. However, the Tribunal found no merit in this contention, stating that the notifications clarified procedural aspects and should not lead to denial of credit based on technical grounds when the duty paid nature of goods, receipt, and usage were not in dispute. The Tribunal cited previous decisions supporting this stance.

3. The third issue pertains to the denial of credit based on technical and procedural grounds. The Tribunal emphasized that denial of credit should not occur solely due to procedural violations when there is no dispute regarding the duty paid nature of goods, their receipt, and subsequent use in manufacturing. The Tribunal highlighted that such clarifications applied to past periods as well, and previous Tribunal decisions supported the position that credit denial on technical grounds without substantive issues is unwarranted.

4. The final issue concerns the remand for verification of certain entries. The Revenue argued against the remand, stating that verification was unnecessary as there was no dispute on the availability of credit on merits. However, the Tribunal upheld the Commissioner (Appeals)' decision, noting that where procedural violations were the only concern raised by the Revenue, verification was deemed necessary by the Deputy Commissioner. The Tribunal found no fault in the Commissioner (Appeals)' decision to allow credit subject to verification in such cases.

In conclusion, the Tribunal rejected the Revenue's appeal, affirming the Commissioner (Appeals)' decision based on the considerations outlined above.