1996 (3) TMI 252 - AT - Central Excise

Summary

Issues:
Denial of modvat credit on inputs received under challans without accompanying gate pass or duty paying documents.

Analysis:
The appeal was filed concerning the denial of modvat credit on inputs received under challans without accompanying gate pass or duty paying documents. The appellants, engaged in detergent manufacturing, purchased inputs from M/s. Godrej Soaps Ltd. in three installments of 2000 kgs. each. The Assistant Collector and the Collector (Appeals) denied modvat credit on the remaining 4000 kgs. received under challans as they were not accompanied by gate pass or duty paying documents as required by Rule 57G. The appellants argued that they only took credit when the relevant gate pass was received, emphasizing substantive compliance over technical lapses. They referred to a Tribunal judgment supporting this argument.

The learned Counsel for the appellants contended that Rule 57A and Rule 57G mandate that credit of duty can only be taken when duty paying documents accompany the goods. The goods were received under a challan without a gate pass, leading to the denial of modvat credit by the lower authorities. The JDR reiterated the lower authorities' findings, emphasizing the necessity of duty paying documents for claiming modvat credit.

After hearing both sides, the Tribunal found that the gate pass covered the entire 6000 kgs. of inputs, all of which were received by the appellants. The inputs recorded in RG 23A Part I were those covered by the gate pass. The dispute centered around the timing of gate pass receipt for the 2 earlier installments. The Tribunal noted that although inputs were received in 3 installments, credit was claimed only upon receiving the gate pass with the last installment. The mistake was procedural as the appellants did not insist on subsidiary gate passes for the earlier installments. The Tribunal held that substantive benefit, modvat credit on the entire 6000 kgs., cannot be denied due to a procedural error. Consequently, the impugned order was set aside, and the appeal was allowed.