2008 (7) TMI 257 - HC - Central Excise

Document for availing credit Notification No. 23/95-C.E. - invoices were not pre-printed but were hand written - particulars required to be pre-printed in terms of notification in question- Whether the Tribunal (CEGAT) was right in allowing Modvat Credit on the strength of invoices which did not satisfy the provisions/criteria laid down under Rule 57GG of the Central Excise Rules 1944 read with Notification No. 23-95-C.E. (N.T.) dated 10-5-1995 Held no

Summary

Issues:
Whether the Tribunal was right in allowing Modvat Credit on invoices not meeting Rule 57GG criteria.

Detailed Analysis:

1. Facts: The case involved an assessee registered for manufacturing toughened glass under the Central Excise Act. The assessee availed Modvat credit based on invoices issued by dealers that did not meet Rule 57GG criteria. The Revenue disallowed the credit, leading to appeals.

2. Assistant Commissioner's Order: The Assistant Commissioner disallowed Modvat credit and ordered recovery under Rule 57-I, without imposing a penalty. The assessee appealed, and the Commissioner set aside the order, stating that the substantive benefit could not be denied for minor non-compliances.

3. Tribunal's Decision: The Revenue appealed to the Tribunal, which upheld the assessee's contention that substantive requirements were met, and procedural lapses should not deny Modvat credit. The Tribunal dismissed the Revenue's appeal.

4. High Court's Analysis: The High Court examined Rule 57GG, which mandates specific details on invoices for availing Modvat credit. The Notification issued under Rule 57GG required pre-printed particulars on invoices to prevent fraud and double credits.

5. Legal Interpretation: The Court emphasized that the statutory requirements were clear and mandatory, not merely procedural. Non-compliance with pre-printed invoice particulars was deemed unacceptable, as it defeated the legislative intent to prevent fraudulent practices.

6. Precedent and Interpretation: The Court rejected the assessee's reliance on precedents suggesting leniency towards procedural lapses. It highlighted the importance of strict compliance with statutory provisions to avail Modvat credit.

7. Court's Decision: The High Court disagreed with the Tribunal's decision to allow Modvat credit on non-compliant invoices. It set aside the lower authorities' orders and held that the Tribunal erred in reversing the Assistant Collector's view. The Court answered the legal question accordingly, upholding the Revenue's disallowance of Modvat credit.

8. Conclusion: The High Court's judgment clarified the importance of adhering to statutory requirements for availing Modvat credit, emphasizing the need for strict compliance with invoice criteria outlined in Rule 57GG and related notifications. The decision highlighted the legislative intent to prevent fraudulent practices and upheld the Revenue's disallowance of credit based on non-compliant invoices.