1999 (7) TMI 266 - AT - Central Excise

Summary

Issues involved:
The denial of Modvat credit on a shortage of spindle oil and the denial of Modvat credits taken on original invoices.

Denial of Modvat credit on shortage of spindle oil:
The appeal was against the Order-in-Appeal upholding the Order-in-Original denying Modvat credit on a shortage of 261 litres of spindle oil out of 4200 litres. The department disallowed credit of Rs. 385 on this shortage, which was accounted for in RG 23A Part-I. The appellants explained the shortage was due to dryage and handling, which was accepted as a logical reason. It was noted that the credit taken did not exceed the duty paid on the invoices, and transit/handling losses should not result in denial of credit already paid. The judgment cited precedents where Modvat credit should be allowed even if the correct procedure was not followed, emphasizing that denial based on technical grounds like using original invoices was not valid. As the department did not allege the credit was not due or the invoices were fraudulent, the Order-in-Appeal was set aside, and the appeal allowed.

Denial of Modvat credits on original invoices:
Modvat credits taken on original invoices were denied as they were not on duplicate copies, deemed irrelevant per Notification No. 4/94 N.T. The judgment referred to previous cases where Modvat credit could not be denied solely for using original invoices instead of duplicates, as long as the credit was otherwise due. Following this reasoning, the Order-in-Appeal was set aside, and the appeal allowed with consequential relief.