1998 (11) TMI 278 - AT - Central Excise

Summary

Issues:
Appeal against disallowed Modvat credit due to non-compliance with Rule 52A(3)(ii) of Central Excise Rules, 1944.

Analysis:
1. The appeal challenged the disallowance of Modvat credit amounting to Rs. 35,683.75 due to non-compliance with Rule 52A(3)(ii) of Central Excise Rules, 1944. The issue revolved around the invoices not meeting the requirements of the rule, specifically regarding the marking of original, duplicate, triplicate, etc. The primary concern was the lack of clarity in distinguishing between the original and duplicate copies of the invoices, raising the question of whether this was a technical lapse or a substantive non-compliance with Rule 52A.

2. The appellant requested the disposal of the appeal based on merits without attending the hearing. They argued that the infirmity in the invoices was of a technical nature and should not lead to the denial of their substantive right to Modvat credit. Citing previous cases, the appellant contended that the defects in the invoices were curable and did not lack information but contained extra details.

3. The respondent, represented by the learned SDR, emphasized the mandatory nature of marking each copy of invoices with original, duplicate, triplicate, etc., as per Rule 52A. It was argued that this requirement should not be considered a mere technical lapse, as distinguishing between original and duplicate copies was crucial to prevent multiple manufacturers from claiming credit on the same invoices. The SDR distinguished the cited case laws from the appellant's argument, stating that the mandatory marking under Rule 52A served as a fundamental control measure under the Central Excise Rules.

4. After considering the arguments and case records, the judge found that the invoices in question did not clearly differentiate between the original and duplicate copies, leading to potential confusion and misuse of Modvat credit. The judge rejected the appellant's claim that the issue was a curable defect, emphasizing the importance of adhering to Rule 52A's requirements, especially the use of the word "shall." Failure to comply with this rule could set a dangerous precedent, jeopardizing revenue and control measures under the Modvat credit scheme.

5. Ultimately, the judge dismissed the appeal, stating that there was no merit in challenging the Order-in-Appeal. The decision was based on the critical nature of complying with Rule 52A to prevent misuse of Modvat credit and maintain control over duty paying documents. The judge highlighted that the lack of clarity in distinguishing between original and duplicate copies posed a significant risk to revenue and control mechanisms, warranting the denial of Modvat credit in this case.