2000 (5) TMI 448 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit, retrospective effect of Notification No. 23/94-C.E.(N.T.), admissibility of Modvat credit on original invoices.

In this case, the jurisdictional Additional Commissioner of Central Excise disallowed Modvat credit amounting to Rs. 44,731.73 taken by the respondents on inputs based on original copies of invoices from 7-4-1994 to 2-6-1994 and imposed a penalty of Rs. 10,000. The Commissioner of Central Excise (Appeals) set aside the disallowance, leading the Department to appeal before the Tribunal. The dispute revolved around the admissibility of Modvat credit on original invoices, particularly in light of Notification No. 23/94-C.E.(N.T.) issued on 20-5-1994. The adjudicating authority initially disallowed the credits, citing Sub-rule 2A of Rule 57G as retrospective, but the Commissioner (Appeals) overturned this decision, relying on precedents allowing Modvat credit based on original invoices. The Department contended that Modvat credit post-20-5-1994 required loss of duplicate copy in transit and satisfaction of the Assistant Collector. The respondents argued that the credits taken before this date should not be affected by the new ruling. The Tribunal considered the case law and ruled that credits taken on original invoices both before and after 20-5-1994 were inadmissible, thereby setting aside the Commissioner (Appeals) order and allowing the Department's appeal.

The Tribunal analyzed the ruling of a Larger Bench in CCE, New Delhi v. Avis Electronics Pvt. Ltd. & Others, which clarified the admissibility of Modvat credit on original invoices post-20-5-1994 only in case of lost duplicate copies in transit. The Tribunal found that the credits taken after this date were not permissible based on original invoices. Regarding credits taken before 20-5-1994, the Tribunal emphasized that the proper invoice for credit during that period was the "duplicate for transporter" copy, and any deviation required prior intimation to the Department. As the appellants did not provide such notice and failed to meet the prescribed requirements, the Tribunal held that the credits based on original invoices before 20-5-1994 were also inadmissible. The Tribunal concluded that the Commissioner (Appeals) order was unsustainable, and the Department's appeal was allowed.

The Tribunal noted the cross-objections filed by the respondents, who were not aggrieved by the Commissioner (Appeals) order. Consequently, the cross-objections were dismissed as the respondents did not challenge the decision, thereby concluding the legal proceedings in the case.