2007 (11) TMI 170 - AT - Central Excise

Received the inputs under cover of dealer s invoice from its sister unit on book adjustment & not on sale credit denied - inputs received had suffered duty & no one else had availed credit of the same - held that once the duty paid nature of the goods wasn t under challenge & invoice contained the details prescribed by the Board, the credit had to be allowed - appellants had satisfied all the conditions of not. 58/97 so sale is not necessary to avail credit so they are eligible for credit

Summary

Issues:
1. Admissibility of Modvat credit for inputs received on stock transfer without sale.

Analysis:
The appeals filed by the Revenue concern the admissibility of Modvat credit for inputs received on stock transfer without involving sale. In Appeal No. E/1197/2000, the Commissioner (Appeals) allowed Modvat credit where inputs were received under a dealer's invoice without sale. The appeal argued that credit is only admissible if inputs are received under an invoice for the sale of goods. However, the Tribunal found that the inputs had suffered duty and no one else had availed credit for the same. It was clarified that it is not necessary for inputs to be received on sale to avail Modvat credit. Previous decisions were cited to support this, emphasizing that the duty paid nature of the goods and compliance with invoice details are crucial for credit eligibility.

In Appeal No. E/207 to 211/04, the appeals were directed against Orders-in-Appeal that denied Modvat credit claimed under a specific Notification. The appellant had received inputs from a sister unit without involving sale, leading to the denial of credit. The Tribunal noted that there was no dispute regarding the receipt of inputs, the duty paid nature of goods, or the genuineness of documents. Relying on past decisions, it was established that credit cannot be denied solely because inputs were not transferred on sale. The Tribunal emphasized that as long as the duty paid nature of goods is not in question and the required details are present in the invoices, credit must be allowed. The Tribunal upheld the decision that the appellant was eligible for the disputed credit, dismissing the appeals.

In both cases, the Tribunal reiterated that the admissibility of Modvat credit does not hinge on inputs being received through a sale transaction. As long as the duty paid nature of goods is established and the necessary invoice details are provided, credit cannot be denied based solely on the absence of a sale transaction. The decisions emphasized the importance of compliance with legal requirements and the duty paid status of goods in determining credit eligibility, ultimately ruling in favor of the appellants in both cases.