2003 (9) TMI 175 - AT - Central Excise

Summary

Issues:
Challenging denial of Modvat credit based on invoices issued by dealer, authenticity of duty paying invoices doubted, contravention of provisions of Rules 57A & 57G, incorrect availment and utilization of Modvat credit, penalty imposed under Rule 173Q, demand of interest, investigation into transactions of dealer, inadequate storage capacity, despatch discrepancies, findings of Commissioner challenged, incorrect invoices admitted, recovery of wrongly availed amount, penal action under Rule 57-I(4), allegations against dealer, lack of evidence against appellants, duty paid nature of goods not disputed, denial of credit based on despatch source on invoices, Tribunal's previous decisions on credit extension, blame on dealer for wrong endorsement, lack of contribution by appellants to incorrect documents, distribution of imported material to customers, lack of evidence against appellants for non-receipt of goods, order denying credit and penalties not sustainable, setting aside of impugned order for all three appellants.

Analysis:
The judgment involves three appellants challenging the denial of Modvat credit based on invoices issued by a dealer, M/s. Shobhit Impex. The Commissioner of Central Excise, Jalandhar denied the Modvat credit to the appellants due to doubts regarding the authenticity of the duty paying invoices. The investigation revealed discrepancies in the transactions of M/s. Shobhit Impex, including inadequate storage capacity and despatch discrepancies. The Commissioner upheld the allegations against the appellants for incorrect availment and utilization of Modvat credit, imposing penalties and demanding interest under relevant rules.

The Tribunal analyzed the case, noting the lack of evidence against the appellants regarding non-receipt of goods and emphasizing the duty paid nature of the goods. It was highlighted that the appellants admitted to incorrect invoices but provided evidence of actual receipt of goods in their factory. The Tribunal referred to previous decisions, stating that as long as the duty paid nature of the goods and their use in manufacturing are not in dispute, credit cannot be denied based solely on despatch discrepancies in the invoices.

The Tribunal found that the blame for incorrect invoices should be on the dealer, M/s. Shobhit Impex, and not on the appellants. It was emphasized that the appellants did not contribute to the creation of incorrect documents and should not be penalized for someone else's wrongdoing. The Tribunal concluded that the order denying credit and imposing penalties was not sustainable, as there was no evidence to show that the appellants did not receive the goods for which they claimed Modvat credit. Therefore, the impugned order was set aside for all three appellants, allowing their appeals.