2006 (11) TMI 213 - HC - Central Excise

Summary

Issues involved: Interpretation of Central Excise Rules regarding availing credit on inputs based on invoices issued by a dealer from premises other than the registered one.

In this judgment, the High Court of Punjab & Haryana at Chandigarh addressed an appeal by the revenue challenging an order of the Customs, Excise and Service Tax Appellate Tribunal. The substantial question of law proposed was whether a manufacturer can claim credit on inputs based on invoices issued by a dealer from premises other than the registered one under Rule 174 read with Rule 52AA of Central Excise Rules, 1944.

The assessee had claimed Modvat credit for the period from January 2000 to August 2000. The department disputed this claim through a show cause notice, citing that the registered dealer had ceased operations from the registered premises. The adjudicating authority upheld this demand and imposed a penalty, which was also confirmed by the appellate authority. However, the Tribunal allowed the appeal of the assessee, emphasizing that payment of duty, receipt of inputs, and their use in the final product were established, and as per the Board's clarification, credit could not be disallowed under such circumstances.

The High Court considered the arguments presented by the revenue and examined the findings. The only contention raised was the statutory requirement that invoices should have been issued from the registered premises of the dealer. The Court noted that this argument lacked merit as it overlooked the clarification provided by the Board in Circular No. 441/7/99 and Notification No. 7/99-C.E., which emphasized that if goods were received, duty paid, and use verified, credit could not be denied solely based on incomplete document particulars.

Consequently, the Court concluded that no substantial question of law arose in this matter and dismissed the appeal, affirming the Tribunal's decision in favor of the assessee.