1997 (4) TMI 170 - AT - Central Excise

Summary

Issues:
1. Interpretation of Modvat Scheme regarding availing credit based on duty paid documents.
2. Validity of Modvat credit taken on the strength of photocopies of Bills of Entry.
3. Consideration of quadruplicate copies of Bills of Entry for Modvat credit.
4. Dispute over the admissibility of Modvat credit based on quadruplicate copies of Bills of Entry.
5. Compliance with Trade Notice of Bombay Customs House for Modvat credit.

Analysis:

1. The primary issue in this case revolved around the interpretation of the Modvat Scheme concerning the eligibility to avail credit based on duty paid documents. The Ld. Collector (Appeals) held that Modvat credit cannot be allowed if it is not based on original duty paid documents, leading to the disallowance of Modvat credit by the Assistant Collector.

2. The appellants, who were manufacturers of wires and cables, imported polythene granules for insulation purposes and availed Modvat credit equal to the additional duty paid on the imported goods. The Department alleged that the appellants took Modvat credit based on photocopies of Bills of Entry, prompting a Show Cause Notice questioning the validity of the credit taken.

3. The appellants argued that they had quadruplicate copies of the Bills of Entry, which contained all necessary details, including the duty paid. They referred to Rule 57G(4) and contended that quadruplicate copies should be accepted for Modvat credit purposes, as triplicate copies are considered original for Rule 57G(4) compliance.

4. On behalf of the respondent Commissioner, it was argued that Modvat credit is typically based on triplicate copies of Bills of Entry to prevent misuse. Therefore, allowing credit based on quadruplicate copies could pose risks of abuse.

5. The Tribunal, after considering the submissions from both sides, noted that the appellants had executed an indemnity bond to safeguard against misuse of the triplicate copy of the Bill of Entry. Additionally, the quadruplicate copy of the Bill of Entry provided all necessary details, with customs authentication of duty payment. Referring to a Trade Notice from the Bombay Custom House allowing Modvat credit based on photocopies in specific circumstances, the Tribunal held that the appellants had correctly taken the Modvat credit by producing quadruplicate copies and executing the indemnity bond.

In conclusion, the appeal was allowed, and the Tribunal directed that any consequential relief be granted to the appellants as per the law.