2000 (12) TMI 386 - AT - Central Excise

Summary

Issues involved: Modvat credit based on original invoice when duplicate copy is lost in transit.

Analysis:
1. The issue at hand revolves around the eligibility of Modvat credit based on original invoices when the duplicate copies are lost in transit. The appellants sought credit against original copies of five invoices for goods purchased in April and May 1994. The Notification No. 23/94-C.E. (N.T.) dated 20-5-1994 introduced Rule 57G (2A) allowing Modvat credit in cases where duplicate copies were lost in transit. However, the invoices in question were issued before this notification. A show cause notice was issued proposing to deny the credit, which was initially rejected by the Assistant Collector. Upon appeal, the case was remanded for a fresh decision. The Assistant Collector eventually allowed the credit, stating that the relaxation under the notification was procedural and could be applied to invoices issued before its enactment.

2. The Commissioner (Appeals) reviewed the case and emphasized that Modvat rules specified the duplicate copy of the invoice as the document for availing credit, with relaxation only applicable when the duplicate copy is lost during transportation. The Commissioner noted that taking credit against the original instead of the duplicate document should be an exception rather than a general practice. In this specific case, the Commissioner found that the respondents sought credit against original invoices where duplicate copies were lost within a short period, indicating a usual rather than exceptional occurrence. Despite no specific provision for such relaxation before the notification, the benefit should have been exceptional. Consequently, the Commissioner set aside the Assistant Collector's decision and upheld the department's appeal.

3. Upon further appeal, the argument was made that the setting aside of the Assistant Commissioner's order was based on a general observation regarding the loss of eligible documents in transit being a common phenomenon. It was contended that this general observation should not be the sole ground for overturning the Assistant Commissioner's decision. The Assistant Commissioner's order was deemed to be legally sound, with no identified illegality or impropriety. The Commissioner's decision was found to lack a substantive basis for setting aside the original order, leading to the restoration of the Assistant Commissioner's decision.

In conclusion, the judgment delves into the nuances of Modvat credit eligibility concerning lost duplicate copies of invoices, the application of procedural relaxations, and the exceptional nature of seeking credit against original invoices. The decision-making process of the Assistant Commissioner and the Commissioner (Appeals) is scrutinized, emphasizing the need for exceptional circumstances for deviating from established practices.