2000 (3) TMI 459 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit of Rs. 10,38,434
2. Whether Modvat credit can be taken on the strength of gate passes endorsed after 1-4-1994 but used before 30-6-1994
3. Whether Modvat credit could be taken on the strength of invoices issued in the name of other parties

Analysis:
The case involved two appeals filed by the assessee against the disallowance of Modvat credit amounting to Rs. 10,38,434. The disallowance was based on the grounds that Modvat credit was taken on endorsed gate passes after 1-4-1994 and on invoices not in the name of the appellants. The appellants were engaged in manufacturing non-alloy/alloy steel wires and received wire rods directly from manufacturers like M/s. Hero Cycles and M/s. Munjal Steels. The authorities alleged that the appellants wrongly availed Modvat credit on endorsed gate passes and invoices not in their name, leading to the demand and subsequent appeal.

Regarding the first issue, the Tribunal referred to previous decisions, starting with Haji Musa Patrawala, and concluded that Modvat credit could indeed be taken on gate passes endorsed after 1-4-1994 but used before 30-6-1994. This issue was found to be in favor of the assessee based on established precedents.

The second issue revolved around whether Modvat credit could be claimed on invoices issued in the name of other parties. The Tribunal noted that although the invoices were in the name of M/s. Hero Cycles and M/s. Munjal Steels, the appellants, M/s. Nirman Industries, had taken the credit. However, it was observed that the challans provided by M/s. Hero Cycles and M/s. Munjal Steels contained all necessary particulars and were issued by registered entities. Referring to a CBEC circular, the Tribunal held that documents issued by registered persons prior to registration were acceptable for claiming Modvat credit. Consequently, Modvat credit was deemed correctly taken by the appellant, leading to the allowance of the appeals and the possibility of consequential relief in accordance with the law.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeals and acknowledging the correctness of the Modvat credit claimed. The decision was based on established legal principles and interpretations of relevant circulars, ultimately resulting in a favorable outcome for the assessee.