2003 (10) TMI 230 - AT - Central Excise

Summary

Issues:
Dispute of Modvat credit involving diversion of consignment, disallowance of credit by Commissioner (Appeals), admissibility of invoice for credit availed, procedural irregularities in handling diverted consignment.

Analysis:
The case involves a dispute regarding Modvat credit related to the diversion of a consignment from Ratnagiri to Pune unit. The appellants faced a show cause notice alleging irregular credit availed on the basis of an invoice issued by the Ratnagiri factory to a buyer in Surat. The Commissioner (Appeals) disallowed the credit citing various grounds, including the lack of a certificate for diversion, failure to segregate rejected goods, and non-adherence to procedural rules like Rule 173H or 173L. However, it was noted that the show cause notice did not specifically mention these procedural irregularities, leading to a challenge on the scope of findings beyond the notice.

The judgment highlighted the legal principle that defects in an invoice can be condoned if critical particulars related to duty payment, use of inputs, and clearance of final goods are not in dispute. Since there was no allegation of non-duty payment or misuse of goods, the diversion of consignment from Surat to Pune only required a correction in the invoice. Therefore, the denial of credit solely based on the invoice irregularity was deemed unjustified.

Ultimately, the appeal was successful, leading to the setting aside of the lower authorities' orders disallowing the credit. The judgment emphasized the importance of focusing on substantive aspects like duty payment and proper use of inputs rather than minor procedural lapses in cases involving Modvat credit disputes.