2024 (1) TMI 447 - AT - Central Excise

Denial of MODVAT Credit availed on capital goods - levy of penalty - denial of credit on the ground that they do not conform by their description either as specified machines or parts and accessories of such machines - HELD THAT - The Appellant has produced details of capital goods of which these goods are claimed as parts and accessories. Accordingly, most of the items specified therein are eligible for credit as 'capital goods' as defined under Rule 57Q of the Central Excise Rules. 1944. Regarding the remaining goods , the appellant contended that even if the goods are not covered under the definition of 'capital goods' they are eligible for credit under input category as per Rule 57A of the Central Excise Rules, 1944. However, it is observed that the adjudicating authority has rejected their contention on the ground that these two categories are not interchangeable. There is no doubt that these goods on which MODVAT credit has been availed were received in the factory premises of the Appellant. Also, there is no dispute that these goods were duty paid and used in relation to manufacture of final product. As these goods were received in the factory premises and they have been used in manufacture of dutiable final products, we hold that they qualify as 'inputs' used in the manufacture of dutiable goods and hence qualify as 'inputs' as defined under Rule 57A of the Central Excise Rules, 1944. Accordingly, the appellant is eligible for the credit of Rs.50,98,653/- either as 'capital goods' as defined under Rule 57Q or as 'inputs' as defined under Rule 57A of the Cenvat Credit Rules. 1944. Denial of credit on the ground that the invoices based on which the credit has been availed do not contain description of goods/part no. of goods - HELD THAT - There is no dispute regarding the receipt of these goods in the factory of the Appellant, and its use in the manufacturing process. Apart from non-mentioning of description or part nos. of goods there is no allegation that other mandatory particulars have been incorrectly mentioned or not mentioned at all. It is a settled position of law that substantive right should not be denied merely due to procedural infirmities. Accordingly, denial of MODVAT credit merely due to deficiency in invoice is not sustainable - this tribunal in Appellant s own case TATA MOTORS LTD. VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR 2009 (10) TMI 316 - CESTAT, KOLKATA dealt with a similar nature of dispute and allowed credit even if there was some deficiency in the invoice. By following the decision cited above, it is held that the MODVAT credit availed by the Appellant cannot be denied. Since, the credit availed is held to be eligible, no penalty imposable. Accordingly, the penalty imposed on the appellant is set aside. Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the denial of MODVAT credit amounting to Rs. 50,98,653/- on capital goods and the denial of MODVAT credit amounting to Rs. 52,389/- based on deficiencies in the invoices.

Issue 1: Denial of MODVAT Credit on Capital Goods:

The impugned order denied MODVAT credit of Rs. 50,98,653/- on capital goods, alleging that the goods did not conform to the description of specified machines or parts and accessories. The appellant argued that most items were covered under Rule 57Q of the Central Excise Rules as capital goods, and for the remaining goods, they provided details of the machines they were used in. The appellant contended that they had filed declarations under Rule 57T, giving details of the disputed goods, contrary to the findings in the impugned order. The tribunal observed that the goods were received in the factory premises, duty paid, and used in manufacturing final products, qualifying them as 'inputs' under Rule 57A. Consequently, the tribunal held that the appellant was eligible for the credit of Rs. 50,98,653/- either as 'capital goods' under Rule 57Q or as 'inputs' under Rule 57A of the Central Excise Rules.

Issue 2: Denial of MODVAT Credit based on Invoice Deficiencies:

MODVAT credit of Rs. 52,389/- was denied due to deficiencies in the invoices, specifically the lack of description or part numbers of goods. The appellant argued that the goods were received in their factory and used in the manufacturing process, and the denial of credit based solely on invoice deficiencies was not sustainable. The tribunal agreed, citing that substantive rights should not be denied due to procedural infirmities. Relying on previous decisions, the tribunal held that the MODVAT credit availed by the appellant could not be denied. As the credit was deemed eligible, no penalty was imposed, and the penalty previously imposed was set aside.

In conclusion, the appellate tribunal set aside the impugned order and allowed the appeal filed by the appellant on 9th January 2024.