1996 (10) TMI 286 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit by Assistant Collector based on loss of duplicate invoice.
2. Interpretation of Rule 57G sub-rule 2(A) regarding the satisfaction of the Assistant Collector for taking Modvat credit.

Detailed Analysis:

1. The Appellant took Modvat credit based on the original invoice as the duplicate meant for the transport carrier was lost. The Assistant Collector denied the credit, stating the Appellant's assertion of losing the duplicate invoice was insufficient. The denial was upheld by the Collector of Central Excise (Appeals). The appeal to the Tribunal was based on Rule 57G sub-rule 2(A), introduced in May 1994, allowing credit if the duplicate invoice is lost in transit.

2. The Appellant's advocate argued that denial of Modvat credit was unjustified and that the Assistant Collector should have verified the duty-paying character of the goods before denying the credit. He contended that the Assistant Collector's satisfaction was not a prerequisite for taking the credit, as per the rule. The advocate emphasized that the manufacturer has the power to take the credit and the Assistant Collector's satisfaction comes into play only if verification raises doubts.

3. The Respondent's representative argued that the lower authorities were correct in requiring the Assistant Collector's satisfaction before allowing the credit, making it a prior condition. He opposed the appeal, maintaining that the denial was justified based on the rule's requirement for the Assistant Collector's satisfaction.

4. The Tribunal analyzed Rule 57G sub-rule 2(A) and concluded that the Assistant Collector's satisfaction should come after an inquiry, not as a prerequisite for taking the credit. The Tribunal criticized the Assistant Collector for not conducting an inquiry before denying the credit based solely on lack of conviction regarding the lost duplicate invoice. The Tribunal set aside the denial, remanding the matter for the Assistant Collector to investigate the duty-paying character of the consignment and decide the case afresh, emphasizing the need for a proper inquiry before denying Modvat credit.