2003 (7) TMI 208 - AT - Central Excise

Summary

Issues Involved: Availability of Modvat credit

Analysis:
The only issue in this appeal revolves around the availability of Modvat credit amounting to Rs. 1,24,586.42 to the appellants. The authorities had disallowed this credit on the grounds that the supplier failed to produce the duplicate transporter's copy, providing only the original copy. However, the appellants argued that they purchased the goods under valid invoices issued by a registered dealer and utilized them in manufacturing final products, making them eligible for the credit under Rule 57GG.

The department contended that since the trader did not produce the duplicate copy, no Modvat credit could be passed on to the appellants. However, the department did not challenge the receipt of duty-paid goods by the appellants from the registered dealer. The appellants' purchase under Rule 57GG did not require them to obtain the duplicate transporter's copy, as this responsibility lies with the trader supplying the goods.

The judgment highlighted that the department's argument against allowing Modvat credit to the appellants was unfounded. The department's reliance on circulars was deemed irrelevant, as these circulars did not preclude genuine buyers from availing Modvat credit due to lapses by the registered trader. Since the department did not dispute the dutiable nature of the goods or their use in manufacturing final products, the appellants were entitled to claim the credit based on valid invoices issued under Rule 57GG.

Consequently, the impugned order disallowing the Modvat credit was set aside, and the appeal of the appellants was allowed with any consequential relief admissible under the rules. The judgment emphasized that actions taken against the trader in a show cause notice did not bind the appellants, as they were not party to those proceedings and had acted in good faith based on valid documentation.

This detailed analysis of the judgment underscores the importance of following procedural requirements while also protecting the rights of bona fide purchasers in claiming Modvat credit under relevant rules and regulations.