1996 (7) TMI 339 - AT - Central Excise

Summary

Issues:
Whether Modvat credit can be availed on the strength of original invoices when a Trade Notice prescribes a specific procedure to be followed.

Analysis:
The appellant in this case had taken credit on the strength of original invoices for certain inputs, as the duplicate invoices were misplaced. The Department contended that a Trade Notice outlined a procedure that needed to be followed to avail such credit. The appellant argued that Rule 57G(2A) allowed for credit on original invoices if the duplicate copy was lost, subject to the satisfaction of the Assistant Collector. The appellant emphasized that Trade Notices are not binding on the Tribunal and cited a relevant decision. The appellant asserted that the Rule permitted taking credit on original invoices, with the satisfaction of the Assistant Collector being a subsidiary process. The Trade Notice, according to the appellant, could not override the rule's requirement. The appellant maintained that the Assistant Collector did not express dissatisfaction with the credit's admissibility, and hence, the appeal should be accepted.

The Department, represented by the learned DR, argued that a Trade Notice was issued pursuant to Rule 57G(2A), setting out the Assistant Collector's satisfaction requirements. Since the appellants did not meet the Trade Notice's requirements, the Department contended that the lower authorities were correct in denying them the Modvat credit benefit.

The Tribunal, after considering both sides' submissions, noted that Rule 57G(2A) provided a relaxation allowing Modvat credit on original invoices in cases where the duplicate invoice was lost. The Tribunal recognized this as a conscious concession, with the only safeguard being the satisfaction of the Assistant Collector as outlined in the Trade Notice. The Tribunal highlighted that the amendment allowing credit on original invoices was introduced in May 1994, with the Trade Notice issued shortly after. Considering it a transition period, the Tribunal emphasized that the substantive benefit of Modvat credit should not be denied for procedural lapses. The Tribunal found no evidence that the goods were not received or duty was unpaid, leading to the conclusion that Modvat credit should be granted to the appellants. Consequently, the appeal was allowed in favor of the appellants.