1999 (12) TMI 255 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit by the Commissioner (Appeals).
2. Interpretation of C.B.E.C. Circular No. 76/76/94 and its applicability.
3. Validity of invoices issued by unregistered dealer for Modvat credit.

Issue 1: Disallowance of Modvat credit by the Commissioner (Appeals)
The Departmental Appeal challenged the Order of the Commissioner (Appeals) dated 24-2-1999, which allowed Modvat credit of Rs. 44,880/- but disallowed credit of Rs. 12,605/- and imposed a penalty of Rs. 1,000. The core issue was the credit availed by the Respondents based on invoices issued from July to September 1994. The Commissioner (Appeals) partially allowed the credit, stating that the dealer had obtained registration before 31-12-1994, making the invoices acceptable under C.B.E.C. Circular No. 76/76/94. The Commissioner also noted that the invoices contained necessary details despite the absence of duty rate and amount. The Department argued that the circular was misinterpreted, emphasizing that unregistered dealers cannot issue valid duty-paying documents for Modvat credit.

Issue 2: Interpretation of C.B.E.C. Circular No. 76/76/94 and its applicability
The Department contended that Circular No. 76/76/94 clarified transitional provisions under Rule 57H and amendments made by Notification No. 64/94 to address Budgetary changes in 1994-95. The circular specified that only registered persons under Rule 57GG could issue valid duty-paying documents for Modvat credit. On the other hand, the Respondents argued that the circular allowed invoices issued by dealers before registration, as long as they met the requirements of Notifications 15/94 and 21/94. They highlighted para 6 of the circular, stating that documents prescribed by the Board could be accepted until 31-12-1994, even if issued before registration.

Issue 3: Validity of invoices issued by unregistered dealer for Modvat credit
The Tribunal analyzed the C.B.E.C. Circular and found that the dealer, although unregistered at the time of issuing invoices, had subsequently registered under Rule 57GG. Referring to para 6 of the circular, the Tribunal concluded that the invoices were valid duty-paying documents for Modvat credit. The Tribunal noted that there was no dispute regarding compliance with Modvat rules in terms of input receipt and utilization for final products. Consequently, the Tribunal upheld the Commissioner (Appeals) order, rejecting the Appeal and affirming the allowance of Modvat credit based on the invoices issued by the dealer.