2017 (1) TMI 147 - AT - Central Excise

MODVAT credit - invoices marked for carriers and not on duplicate invoices - denial on the ground that the invoices are bearing the mark (for carriers) whereas it should be duplicate copy for transporter - Held that - the mere incorrect marking appearing on the invoices but no other discrepancy such as dispute on the amount of duty, receipt and used inputs in the product was not raised. MODVAT credit for such a small discrepancy MODVAT credit cannot be denied - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute on availment of MODVAT credit based on incorrect marking on invoices.

Analysis:
The issue in this case revolves around the denial of MODVAT credit amounting to &8377; 7,46,962/- due to discrepancies in the marking on invoices. The adjudicating authority and the Commissioner (Appeals) upheld the denial of credit, citing that the invoices were not marked as "duplicate for transporter" and were issued without registration and duty paying particulars. The appellant challenged this decision, arguing that the documents were valid as per MODVAT credit Rules, and the only issue was the incorrect marking on the invoices. The appellant contended that the denial of credit solely based on this discrepancy was unjustified, especially considering that there was no question about the validity of the documents themselves.

The appellant's counsel highlighted that during the relevant period, there was no requirement for dealers to be registered for issuing modvatable invoices. Therefore, even if the registration status of the invoice issuer was considered, it should not have led to the denial of MODVAT credit. On the other hand, the Revenue representative reiterated the findings of the impugned order, supporting the denial of credit based on the discrepancies in marking on the invoices.

Upon careful consideration of the arguments presented by both parties, the Tribunal found that the denial of MODVAT credit solely due to the incorrect marking on the invoices, without any other substantial discrepancies related to duty amounts or input usage, was unwarranted. The Tribunal disagreed with the lower authorities' reasoning, noting that the issue of the supplier not being registered was not raised in the show-cause notice, making it impermissible to base the denial of credit on this ground. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal's decision centered on the principle that minor discrepancies in marking on invoices should not lead to the denial of MODVAT credit, especially when the validity of the underlying documents is not in question. The judgment emphasized the importance of adhering to the specifics raised in the show-cause notice and avoiding extrapolating beyond the scope of the original allegations when determining the eligibility for credit under the relevant rules and regulations.