2004 (8) TMI 257 - AT - Central Excise

Summary

Issues: Validity of disallowed Modvat credit and confirmed penalty

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the appellants challenged the validity of the part of the impugned order-in-appeal where the Commissioner (Appeals) disallowed them the Modvat credit of Rs. 1,61,866/- in respect of invoices issued by M/s. Rama Steel Traders and confirmed a penalty of Rs. 75,000/-. The appellants availed the Modvat credit in question for the purchase of CR/HR Sheets/coils from M/s. Rama Steel Traders during a specific period. The credit was disallowed based on a report by postal authorities stating that no such trader was stationed at the given address. However, the tribunal noted that the genuineness of the invoices submitted by the appellants containing all details regarding payment of duty and sales tax number of the supplier was doubted by the department. The tribunal emphasized that the Modvat credit could not be denied solely based on a report by postal authorities without further evidence or explanation.

Regarding the time-barred nature of the demand for recovery of the Modvat credit amount, the tribunal observed that the credit was taken by the appellants during a specific period, and the department was aware of it as the invoices were submitted for defacement at that time. The tribunal highlighted that there was no suppression of facts by the appellants, and thus, the extended period for invoking the demand could not be legally applied. The tribunal also referenced another credit sought to be disallowed by the department, which was availed by the appellants in a different period. The Commissioner (Appeals) had observed that the extended period could not be invoked for that demand due to the absence of suppression of facts. The tribunal concluded that the findings of the Commissioner (Appeals) regarding the extended period must apply to the entire demand raised by the department, including the disputed amount of Modvat credit disallowed. As a result, the tribunal set aside the impugned order of the Commissioner (Appeals) to the extent challenged in the appeal, allowing the appeal of the appellants with consequential relief, if any, permissible under the law.