1997 (9) TMI 207 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit by Collector and imposition of penalty.
2. Denial of Modvat credit based on Bills of Entry not in the name of appellants.
3. Interpretation of Circulars and Notifications regarding Modvat credit.
4. Admissibility of Modvat credit on endorsed Bills of Entry.
5. Traveling beyond the issues raised in the show cause notice.
6. Validity of relying on specific Notifications for disallowing Modvat credit.
7. Entitlement of Modvat credit on inputs received by a registered unit based on endorsed Bills of Entry by another registered unit.
8. Admissibility of credit taken on endorsed G.P. 1s during a specific period.
9. Compliance with Rule 57G for availing Modvat credit.

Analysis:
The judgment concerns the disallowance of Modvat credit and imposition of a penalty by the Collector on the appellants. The issue arose as the Bills of Entry for which credit was claimed were not in the name of the appellants, but another company. The appellants argued that the Bills of Entry were endorsed in their name, justifying their claim for Modvat credit. The Department contended that the receipt of inputs should be supported by an invoice issued by the importer, as per Notification No. 16/94-C.E. The Tribunal analyzed the Circulars and Notifications regarding Modvat credit and endorsed Bills of Entry, emphasizing the entitlement of credit on such documents if certain conditions were met.

The Tribunal considered whether the appellants were entitled to avail Modvat credit on endorsed Bills of Entry during a specific period. It was noted that the Bills of Entry were initially in the name of another company but were subsequently endorsed in favor of the present appellants. The Tribunal referred to Circulars clarifying the provisions for availing Modvat credit on endorsed Bills of Entry, especially when the Registered Office/Head Office was the same for both entities. The Tribunal emphasized that the conditions for availing credit were satisfied, even though the two units were separately registered under Central Excise Rules.

Another issue addressed was the Collector's reliance on specific Notifications to disallow credit taken on endorsed G.P. 1s during a particular period. The Tribunal found that the impugned order exceeded the scope of the show cause notice by relying on a different Notification than the one mentioned in the notice. The Tribunal concluded that the impugned order was liable to be set aside on this ground, among others.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential reliefs to the appellants as per the law. The judgment highlighted the importance of compliance with relevant rules and regulations for availing Modvat credit and emphasized the need for a strict interpretation of Notifications and Circulars governing such credits.