1998 (9) TMI 171 - AT - Central Excise

Summary

Issues:
1. Admissibility of modvat credit availed by the appellants.
2. Validity of subsidiary gate pass as a prescribed document for modvat credit.
3. Discrepancy between the supplier of goods and the issuer of the subsidiary gate pass.
4. Requirement of evidence to establish the flow of goods through an intermediary.

Issue 1: Admissibility of modvat credit:
The appeal challenged the order confirming a demand for inadmissible modvat credit of Rs. 21,313.33 by the appellants. The Assistant Commissioner alleged that the appellants availed modvat credit based on subsidiary Gate Passes, where the purchase bills did not match the actual suppliers. The Commissioner (Appeals) upheld this decision, stating that the goods covered by the gate pass could not be conclusively identified.

Issue 2: Validity of subsidiary gate pass:
The appellants argued that a previous Tribunal decision supported the acceptance of subsidiary gate passes as valid documents for modvat credit. The Tribunal had previously ruled that subsidiary gate passes should not be disregarded for modvat credit purposes, even if payment was made to a different supplier than the one listed on the gate pass.

Issue 3: Discrepancy in supplier information:
The Department contended that the case at hand differed from the previous Tribunal decision because the show cause notice was based on the discovery that the subsidiary gate pass issuer did not match the actual supplier. However, the Tribunal noted that the goods were the same, as confirmed by the Assistant Commissioner, and were utilized as duty-paid inputs, making the subsidiary gate pass a valid document for credit.

Issue 4: Requirement of evidence for goods flow verification:
The Tribunal emphasized the need for appellants to provide evidence demonstrating the flow of goods through an intermediary when payments were made to a different supplier than listed on the gate pass. In this case, the Assistant Commissioner confirmed that the goods were the same, and since the subsidiary gate pass was an acceptable document for credit during that period, the impugned order was set aside, and the appeal was allowed, granting the appellants consequential relief.