2005 (2) TMI 198 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit, interest levied under Section 11AB, penalty under Section 11AC and Rule 173Q

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, the issue at hand involved the disallowance of Modvat credit amounting to Rs. 44,56,512/-, imposition of interest of Rs. 17,71,336/- under Section 11AB of the Central Excise Act, 1944, and penalty under Section 11AC of the Act, along with an additional penalty of Rs. 50,000/- under Rule 173Q of the Central Excise Rules. The disallowance was based on the contention that the credit was availed on the basis of Xerox copies of invoices, which were deemed invalid as duty paying documents for Modvat credit purposes.

Upon hearing both sides, the appellant argued that the credit was rightfully claimed based on duplicate copies of invoices and the original copy of the Rule 57E Certificate. It was explained that the original invoices were misplaced, and during an audit verification, only Xerox copies of duty paying documents were presented. The Tribunal noted that the requirement under Rule 57T(10) of the Central Excise Rules during the relevant period mandated the filing of monthly RT 12 returns with duplicate invoices and the original certificate under Rule 57E within five days after the end of each month. The Superintendent of Central Excise was required to deface and return the original duty paying documents, and it was acknowledged that this requirement was fulfilled by the appellants. Notably, the department did not raise any concerns regarding the non-filing of RT 12 returns with duplicate invoices and the original certificate under Rule 57E. Consequently, the Tribunal accepted the assessees' contention that they initially availed Modvat credit using valid duty paying documents, namely duplicate invoices and the original Rule 57E certificate. As a result, the impugned order was set aside, and the appeal was allowed.