2005 (8) TMI 12 - AT - Central Excise

Cenvat / Modvat Credit availed on the basis of invoice issued by registered dealer after he stopped functioning from registered premises

Summary

Issues:
- Denial of Modvat credit by Commissioner (Appeals) based on the registered dealer's cessation of functioning from the address given in the invoices.
- Interpretation of Notification No. 7/99-CE and Rule 57G regarding denial of credit for procedural lapses.
- Applicability of Board's Circular No. 441/7/99 in cases of denial of Modvat credit.
- Verification of inputs, duty payment, and intended use for final product to allow Modvat credit.

Analysis:
The appellant filed an appeal against the order-in-appeal denying Modvat credit due to goods received from a registered dealer who had stopped functioning from the registered premises. The appellant argued that there was no dispute regarding duty payment, receipt, and use of inputs in the final product. They relied on Notification No. 7/99-CE and Board's Circular No. 441/7/99 to support their claim that credit should not be denied for procedural lapses if duty payment and use of goods are verifiable.

The Revenue contended that since the registered dealer had ceased operations from the address on the invoices, the appellant was not entitled to credit as the particulars could not be verified. However, the Revenue did not dispute the other details in the invoices. The Tribunal noted that Rule 57G had been amended to allow credit if duty payment and use of goods could be verified, irrespective of procedural lapses. The Board's circular emphasized the need for verification of duty payment and intended use before denying credit based on procedural grounds.

Ultimately, the Tribunal found that the denial of credit solely based on the registered dealer's cessation of operations at the given address was not sustainable. Considering the amendments to Rule 57G and the guidance provided in the Board's circular, the Tribunal set aside the impugned order and allowed the appeal, highlighting the importance of verifying duty payment and intended use of inputs for granting Modvat credit.

This judgment underscores the significance of ensuring verifiability of duty payment and use of goods in cases of denial of Modvat credit, emphasizing that procedural lapses should not automatically lead to credit denial if the essential criteria are met.