1999 (2) TMI 188 - AT - Central Excise

Summary

Issues:
1. Availing Modvat credits based on invoices from unregistered dealers.
2. Interpretation of Rule 57GG introduced on July 4, 1994.
3. Denial of benefit due to procedural irregularities.
4. Allegation of discrimination.
5. Retrospective issuance of registration certificate.
6. Duty liability waiver in case of retrospective licenses.

Issue 1: Availing Modvat credits based on invoices from unregistered dealers
The appeal was against an order alleging wrongful availing of Modvat credits on the basis of invoices from unregistered dealers. The appellants, engaged in manufacturing Detergent Powder, justified their actions by stating that the supplier of their raw material had applied for registration within the stipulated period but was not attended to by the department promptly. The appellants argued that since the supplier was deemed to be registered from the date of application dispatch, they were entitled to take Modvat credits on the challans issued by the supplier for raw material transfer.

Issue 2: Interpretation of Rule 57GG introduced on July 4, 1994
The appellant contended that Rule 57GG, introduced as a transitional provision on July 4, 1994, required time for industry familiarization with new formalities. They argued that a substantive benefit granted by law should not be denied due to procedural irregularities. Citing precedents, the appellant emphasized that substantial benefits cannot be denied merely due to procedural deviations during the transitional period.

Issue 3: Denial of benefit due to procedural irregularities
The appellant highlighted that they had made the necessary application within the time indicated in the Board's Circular. They argued that procedural irregularities should not lead to the denial of substantial benefits. The appellant referenced a case where the Tribunal held that benefits could not be denied solely based on procedural delays during the transitional period.

Issue 4: Allegation of discrimination
The appellant raised concerns about discrimination, citing another manufacturer who was allowed the benefit despite receiving a Registration Certificate later than the appellants. The appellant argued that they should receive similar treatment as they fulfilled the necessary requirements within the stipulated period.

Issue 5: Retrospective issuance of registration certificate
The appellant argued that the subsequent registration in May 1995 validated their eligibility for registration back in December 1994. They contended that the delay in registration was not due to their fault and that they should be considered as deemed registered within the transitional period.

Issue 6: Duty liability waiver in case of retrospective licenses
The appellant emphasized that the duty liability cannot be waived even when licenses are issued retrospectively. They referred to a case where it was held that duty liability cannot be waived in such circumstances. However, the appellant argued that in their case, the delay in registration was not their fault, and they should not be penalized for procedural delays.

In conclusion, the Tribunal found merit in the appellant's arguments, emphasizing that the registration process was in the hands of the department. Considering the transitional period and precedents, the Tribunal allowed the appeal, stating that substantial benefits under the law should not be denied due to procedural delays.