1999 (12) TMI 399 - AT - Central Excise

Summary

Issues:
Appeal against order-in-appeal confirming recovery of Modvat credit, penalty, and interest - Compliance with Rule 57G for availing Modvat credit - Procedural lapse in invoice accompanying inputs.

Analysis:
The appeal challenged an order confirming the recovery of Modvat credit, penalty, and interest imposed by the Assistant Commissioner. The appellant, represented by Shri A.S. Sunderrajan, argued that the Department alleged Modvat credit was taken without actual receipt of inputs, relying on a statement by the appellant's representative. The appellant claimed to have initially received inputs under Rule 57 F(3) for job work and later decided to use part of the inputs for their own manufacturing. They requested the supplier to reverse the credit, which was done through an invoice without accompanying goods. The appellant argued that denying Modvat credit for a procedural lapse was unjust, citing the Supreme Court decision in Mangalore Chemicals and Fertilizers Ltd. v. CCE and the Tribunal decision in Tirupati Polymers v. CCE.

The Respondent Commissioner, represented by Shri Panchatcharam, contended that the appellant had taken credit without receiving inputs under Rule 57G, emphasizing the requirement for inputs to be received under duty-paying documents. The Commissioner (Appeals) rejected the appellant's claim of receiving inputs for job work and later purchasing them, deeming it a violation of Rule 57G. The Respondent urged for upholding the impugned order.

Upon review, the Judge observed that Rule 57G did not mandate simultaneous receipt of inputs and invoices, only requiring inputs to be received under duty-paying documents. The appellant admitted non-receipt of goods with a specific invoice but claimed to have received inputs earlier under Rule 57 F(3). As the appellant received inputs and invoices covering the same quantity, compliance with Modvat Rules was deemed satisfactory. The Judge found any lapse to be procedural, citing the Tribunal decision in Tirupati Polymers as precedent where Modvat credit was allowed even if duty-paying documents were received later.

Consequently, the appeal was allowed, and the impugned order was set aside, entitling the appellants to consequential benefits as per the law.