1998 (2) TMI 253 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit under Rule 57-I of C.E. Rules, 1944.
2. Validity of Modvat credit availed on input 'Caprolactum'.
3. Compliance with registration requirements under Rule 57GG of Central Excise Rules, 1944.
4. Verification of documents and details in invoices for grant of Modvat credit.
5. Dispute regarding availability of Modvat credit based on furnished invoices.

Detailed Analysis:
1. The appellants were issued a show cause notice for disallowance and recovery of Modvat credit amounting to Rs. 3,55,02,000 under Rule 57-I of C.E. Rules, 1944. The notice alleged wrongful utilization of Modvat credit on 'Caprolactum' based on invoices from unregistered suppliers. The appellants contested the claim, arguing that their suppliers were registered under Rule 57GG prior to the specified date, citing a Tribunal judgment and Notification No. 64/94. Despite the appellants' defense, the Commissioner disallowed the claim and imposed a penalty of Rs. 35 lakhs.

2. Following a stay application and subsequent directions by the Bench, the Revenue was instructed to verify the documents submitted by the appellants. The appellants claimed compliance with all requirements and submitted detailed reports highlighting the validity of the invoices and the duty-paying nature of the inputs. The appellants emphasized that the issue was confined to the correctness of the details in the invoices and asserted that Modvat credit should not be denied if all details were in accordance with the law.

3. The Counsel for the appellants argued that there was no dispute regarding Modvat credit granted before July 1994 and after October 1994, as the dealers were registered within the stipulated timeline. The Counsel contended that the verification of invoice details was crucial, and any discrepancies would disentitle the appellants from the Modvat credit. The Departmental Representative (DR) opposed the arguments and the verification process, claiming that the furnishing of mandatory details in the invoices was essential for Modvat credit eligibility.

4. Upon considering the submissions, the Bench acknowledged the significance of Caprolactum as an input for Modvat credit. The key issue revolved around whether Modvat credit could be extended based on the furnished invoices. The Counsel highlighted that the dealers were registered within the specified period, addressing the initial objection raised by the department. The Bench noted that the verification of inputs had not been completed but emphasized that the invoices contained all necessary details as per the law. Consequently, the matter was remanded to the Commissioner for a detailed order after granting a hearing to the appellants and verifying the submitted documents. As a result, the appeal was allowed by remand, overturning the impugned order.