1999 (8) TMI 357 - AT - Central Excise

Summary

Issues:
1. Availing benefit of deemed Modvat credit facility under different orders.
2. Allegation of tampering and manipulation of invoices.
3. Denial of credit and imposition of penalty.
4. Interpretation of the Modvat credit facility rules.
5. Examination of the Director's statement.
6. Voluntary payment under protest.
7. Requirement of showing thickness in invoices for Modvat credit.
8. Lack of evidence to support the manipulation charge.

Analysis:
1. The appellants availed the benefit of deemed Modvat credit facility under various orders issued by the Ministry of Finance. The eligible inputs described remained consistent, focusing on "Steel Sheets of Thickness not exceeding 5mm." The assessees procured goods from the market sources based on invoices but faced scrutiny later due to discrepancies in the thickness details on the invoices.

2. The jurisdictional officers raised concerns about the alleged tampering and manipulation of invoices by the assessees. Despite voluntarily reversing credit amounting to Rs. 2,95,289, a show cause notice was issued seeking to deny credit on invoices from a specific period. The Collector confirmed the demand, emphasizing the manipulation of documents, leading to the imposition of a penalty on the assessees.

3. The appeal challenged the denial of credit and penalty imposition. The Tribunal examined the Modvat credit facility rules, emphasizing that the invoices did not need to precisely match the description in the orders as long as the goods were eligible. The absence of specific thickness details on invoices did not automatically disqualify the credit unless the goods exceeded the permitted thickness.

4. The Director's statement played a crucial role in the case. The statement clarified the practice of checking and documenting thickness details post-receipt of goods, with dealer consent. The statement did not indicate any wrongful intent or discrepancy in the thickness of received goods, refuting the manipulation allegations.

5. The voluntary payment made by the assessees was not an admission of guilt but a proactive measure to avoid further departmental proceedings. The payment under protest did not strengthen the revenue's case against the assessees, as it was not an acknowledgment of wrongdoing.

6. The Tribunal concluded that the absence of a rule mandating thickness details in invoices for Modvat credit discredited the manipulation charge. Without concrete evidence showing the actual goods exceeding the permitted thickness, the Collector's order was deemed unsustainable. The appeal was allowed, granting consequential relief to the assessees.