2006 (2) TMI 10 - AT - Central Excise

Central Excise Modvat credit Credit not disallowable on ground that input provider had not paid duty on inputs when invoice showed details of duty payment by input provider

Summary

Issues:
1. Modvat credit disallowed by original authority.
2. Validity of Modvat credit passed on by input-supplier.
3. Distinction in the case of R.S. Industries.
4. Applicability of R.S. Industries decision.
5. Dismissal of Revenue's appeal.

Analysis:
1. The judgment addresses the issue of Modvat credit disallowed by the original authority to the respondents, who had taken credit based on invoices from M/s. Indian Oil Corporation Ltd. The authority disallowed the credit as duty mentioned on the invoices was not paid to the Exchequer by M/s. IOCL, leading to the appeal by the Revenue.

2. The validity of Modvat credit passed on by the input-supplier is crucial in this case. The learned Jt. CDR argued that the credit was not valid as duty had not been subsequently recovered from the input-supplier. However, the Tribunal's decision in R.S. Industries v. CCE, New Delhi was relied upon by the learned Commissioner (Appeals) to allow the credit, emphasizing the importance of duty payment particulars on invoices.

3. The judgment distinguishes the present case from R.S. Industries by highlighting the recovery of duty from the input-supplier in the latter case due to fraudulent activities involving bogus invoices. Despite this distinction, the Tribunal in R.S. Industries held that Modvat credit cannot be denied if goods were received under valid invoices containing duty payment particulars.

4. In the instant case, the respondents received inputs under valid invoices from M/s. IOCL, which contained duty payment particulars. The judgment finds that the view taken in R.S. Industries applies to the present case, as the respondents purchased dutiable goods based on valid invoices, justifying the Modvat credit taken by them.

5. Consequently, the Revenue's appeal is dismissed based on the application of the law as per the decision in R.S. Industries. The judgment concludes with the dismissal of the appeal, affirming the correctness of the decision made by the learned Commissioner (Appeals) regarding the admissibility of Modvat credit to the respondents.