2002 (2) TMI 275 - AT - Central Excise

Summary

Issues:
- Availing Modvat credit on invalid duty paying documents
- Interpretation of rules regarding issuance of modvatable invoices
- Applicability of previous tribunal decisions

Analysis:
1. The appellants were charged with availing Modvat credit based on documents deemed invalid under Rules 57GG and 52A of the Central Excise Rules, 1944. The issue arose from invoices issued by M/s. Guljag Industries Limited, Pali, a registered dealer, who received goods from manufacturers M/s. Tata Chemicals Limited, Mithapur. The Deputy Commissioner held that despite the parent invoices not being in favor of the dealer, Modvat credit could not be denied if all other conditions were met.

2. The department appealed this decision, leading to the Commissioner of Central Excise (Appeals), Jaipur, ruling that since the manufacturer's invoices were not in favor of the dealer at Pali, the dealer could not issue further modvatable invoices. Citing precedent cases, the Commissioner allowed the appeal by setting aside the original decision, emphasizing the importance of invoices being issued correctly.

3. In the subsequent appeal against the Commissioner's decision, the Tribunal considered a similar case precedent where credit was allowed despite discrepancies in invoice issuance. The Tribunal agreed with this precedent, stating that as long as the branch offices of the dealer were registered and received goods directly from the manufacturer, the credit could not be denied based on irregularities by the dealer. The Tribunal found the facts of the present case aligned with the previous decision, disagreeing with the Commissioner's reliance on the Larger Bench decision.

4. Ultimately, the Tribunal held that penalizing the appellants for availing Modvat credit based on invoices from registered dealers, without any action against the dealers for rule violations, was unjust. The Tribunal allowed the appeal, setting aside the Commissioner's order and emphasizing the validity of credit based on proper documentation despite procedural irregularities by the dealer.