2005 (12) TMI 30 - AT - Central Excise

Central Excise - Cenvat credit - The first stage dealer s supplementary invoices issued on the basis of manufacturer s supplementary invoices are eligible for credit

Summary

Issues:
Appeal against granting Modvat credit based on supplementary invoices issued by the first stage dealer.

Detailed Analysis:
The appeal was filed challenging the Order-in-Appeal where Modvat credit was granted to the respondent based on invoices issued by the first stage dealer. The respondents, as manufacturers, were availing Modvat credit using invoices from the first stage dealer, which were backed by supplementary invoices from the manufacturers. A show cause notice was issued, denying credit on these invoices, stating that the first stage dealer's supplementary invoices were not eligible for credit. The adjudicating authority upheld the demand and imposed a penalty. However, on appeal, the Commissioner (Appeals) reversed the decision, allowing the credit to the respondent, leading to the appeal by the Revenue.

Upon hearing both sides and reviewing the records, the Commissioner (Appeals) highlighted that the supplementary invoice is integral to the main invoice, reflecting the duty paid on inputs initially supplied by the manufacturer. The Commissioner emphasized that the invoice issued by the dealer based on the manufacturer's supplementary invoice falls under the valid document category for Cenvat Credit, as per Rule 7 (a) (iv). It was clarified that there was no dispute regarding the duty payment details in the supplementary invoice.

Further scrutiny revealed that the invoices issued by the first stage dealer were covered under Rule 7 of the Cenvat Credit Rules, 2002, which includes invoices from first stage dealers as valid documents for credit. These invoices were based on additional duty paid by the manufacturer to the government. It was established that the respondents had procured goods from the first stage dealer, with part of the duty previously paid being credited to them. Denying credit to the respondent for duty paid by the manufacturer on the same goods, solely due to the term "supplementary invoices," would lead to a miscarriage of justice. The judgment emphasized that the duty amount paid by the manufacturer for the second time was a legitimate right of the respondent for availing benefits. Consequently, the decision was made to dismiss the appeal, as the order-in-appeal was deemed appropriate and did not warrant any interference.

In conclusion, the judgment upheld the validity of availing Modvat credit based on invoices issued by the first stage dealer supported by supplementary invoices from the manufacturers, emphasizing the importance of following the relevant rules and ensuring justice in duty credit entitlements.