1997 (11) TMI 282 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit based on the color of the invoice.
2. Compliance with the notification regarding Modvat credit requirements.
3. Applicability of penalty in the case.

Issue 1: Admissibility of Modvat credit based on the color of the invoice:
The appeal challenged the disallowance of Modvat credit amounting to Rs. 40,650/- by the Assistant Commissioner of Central Excise due to the appellant using a white-colored duplicate invoice instead of the prescribed pink color. The appellant argued that the deficiency was procedural and should not negate the substantive benefit of Modvat. They cited Tribunal decisions to support their stance and highlighted that the invoices were issued during a transition period following the new color requirement. The appellant also provided a certificate from the dealer confirming the duty payment on the supplied material. However, the opposing argument emphasized that the notification specifying the invoice color was publicized in advance to prevent misuse of Modvat. The judgment noted that the specific requirement of using pink duplicate invoices for Modvat credit was clearly outlined in the notification, and the deviation by the appellant could not be condoned. Consequently, the Modvat credit was rightly denied by the lower authorities.

Issue 2: Compliance with the notification regarding Modvat credit requirements:
The notification regarding the color and format of invoices for Modvat credit was issued on 30-5-1995 and came into force on 1-8-1995. The purpose of the notification was to streamline the Modvat procedure and prevent unauthorized credit claims. The judgment emphasized that the trade had sufficient notice of the new requirement through various publications. It was highlighted that following prescribed procedures for availing benefits was crucial, as underscored in previous Supreme Court decisions. The judgment concluded that the discipline proposed by the notification aimed to regularize Modvat utilization and prevent misuse, justifying the denial of Modvat credit to the appellant for not adhering to the prescribed invoice color.

Issue 3: Applicability of penalty in the case:
The Assistant Commissioner had imposed a penalty of Rs. 5,000/- along with the disallowance of Modvat credit, which was confirmed by the Commissioner (Appeals). However, the judgment found that while the denial of Modvat credit was justified, the imposition of the penalty was unwarranted in the circumstances of the case. As a result, the penalty imposed on the appellant was set aside, and the impugned order was modified to exclude the penalty but upheld in all other aspects. The appeal was allowed to the extent of setting aside the penalty and dismissed otherwise, maintaining the decision on the Modvat credit denial.