2000 (5) TMI 257 - AT - Central Excise

Summary

Issues:
- Disallowance of Modvat credit on computer-generated invoices
- Imposition of penalty for alleged contravention of procedural requirements

Analysis:
1. Disallowance of Modvat credit on computer-generated invoices:
The case involved the disallowance of Modvat credit by the jurisdictional Assistant Commissioner of Central Excise on the grounds that computer-generated invoices used by the appellants did not bear pre-printed serial numbers as required by certain trade notices. The Commissioner of Central Excise (Appeals) allowed the credit, stating that technical violations of procedural requirements should not result in the denial of credit. The lower appellate authority upheld the penalty for violating procedural requirements under a specific trade notice. The Tribunal considered the provisions of sub-Rule (8) of Rule 57-GG of the Central Excise Rules applicable during the dispute period, which permitted the use of computer-generated invoices for Modvat credit. The Tribunal also referenced a Board circular clarifying that Modvat credit should not be denied due to the absence of pre-printed serial numbers on computer-generated invoices. The Tribunal concluded that the appellants had not contravened the law in availing the Modvat credit, and the penalty imposed by the lower authorities was unsustainable.

2. Imposition of penalty for alleged contravention of procedural requirements:
The lower authorities imposed a penalty on the appellants for violating procedural requirements based on sub-Rules (4) and (6) of Rule 57GG and a trade notice issued by the Delhi Commissionerate. However, the Tribunal found that sub-Rule (8) of Rule 57GG, in force during the dispute period, allowed the use of computer-generated invoices with computer-printed serial numbers for Modvat credit. The Tribunal highlighted that the Board's circular clarified that Modvat credit should not be denied due to the absence of pre-printed serial numbers on computer-generated invoices. The Tribunal determined that the department and lower authorities had overlooked the provisions of sub-Rule (8) and the Board's circular, rendering the penalty invalid. Consequently, the Tribunal set aside the penalty and allowed the appeal, emphasizing that the orders of the lower authorities regarding the penalty were unsupportable in light of the legal provisions and the Board's circular.