1996 (6) TMI 142 - AT - Central Excise

Summary

Issues:
Appeal against denial of Modvat credit based on original invoices lost before the introduction of relevant provision - Interpretation of retrospective effect of procedural provision - Consideration of Tribunal's precedent on retrospective nature of procedural changes - Requirement of satisfaction of Assistant Collector for allowing Modvat credit - Waiver of pre-deposit - Clarification on the procedural nature of Rule 57G - Ensuring no misuse of Modvat credit facility.

Analysis:
The appeal involved a dispute regarding the denial of Modvat credit to the appellants based on original invoices lost before the introduction of a relevant provision. The appellants had taken the credit on the basis of original invoices as the duplicates were lost. The Assistant Collector had denied the benefit citing that the provision allowing credit on the basis of original invoices in case of duplicate loss was introduced later. The learned counsel argued that the provision was procedural and clarificatory, emphasizing that the items were received when the system was new and not fully understood by all parties involved.

The main contention revolved around the retrospective nature of the procedural provision. The counsel cited a Tribunal's order to support the argument that procedural changes should be deemed retrospective. It was highlighted that the provision allowing credit on the basis of original invoices clarified the alternative course in case of loss and should be considered retrospective. The provision also required satisfaction of the Assistant Collector for availing the credit, and the appellants offered to provide an undertaking to prevent misuse of the facility if the duplicate invoice was subsequently recovered.

The learned DR argued that the denial was justified as the relevant notification was prospective, allowing Modvat credit only on the basis of duplicate invoices from a certain date. However, the Tribunal observed that Rule 57G was procedural in nature and aimed to prevent misuse of the credit facility. The provision requiring satisfaction of the Assistant Collector was seen as a safeguard against misuse. The Tribunal noted that the provision was clarificatory and retrospective in nature, as it explicitly stated a procedure that was already implied.

Considering the arguments and the nature of the provision, the Tribunal waived the pre-deposit and proceeded to address the main appeal. It was emphasized that the purpose of the provision was to ensure the correct utilization of Modvat credit and prevent misuse. The Tribunal accepted the appeal, setting aside the previous orders and directing the Assistant Collector to allow the credit after satisfying himself through appropriate means, such as an affidavit, undertaking, or inquiry, to ensure compliance and prevent misuse of the facility.