2001 (1) TMI 374 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit by Asstt. Commissioner under Rule 57-I of Central Excise Rules, 1944.
2. Imposition of penalty under Rule 173Q.
3. Appeal filed by the party against the order of the Commissioner (Appeals).
4. Contention regarding admissibility of credit on the strength of the original invoice under Rule 57G(2)(A).
5. Requirement of obtaining permission from jurisdictional Asstt. Commissioner when the duplicate copy of the invoice is lost in transit.

Analysis:

1. The Asstt. Commissioner disallowed Modvat credit amounting to Rs. 58.025/- on original invoices from M/s. VXL India Ltd. The Asstt. Commissioner observed that Modvat credit under Rule 57G is admissible only on the duplicate copy of the invoice, and permission is required to claim credit on the original copy if the duplicate is lost in transit. The party failed to prove the loss of the duplicate copy, leading to the conclusion of irregular credit and disallowance of the request for credit regularization.

2. The party appealed against the Asstt. Commissioner's order, and the Commissioner (Appeals) allowed the appeal, emphasizing that the receipt and use of duty paid inputs were not in dispute. The Commissioner held that Modvat credit could not be denied due to procedural lapses when the inputs were duty paid and used in manufacturing the final product.

3. The Revenue appealed against the Commissioner (Appeals) decision, arguing that permission from the Asstt. Commissioner is mandatory before claiming credit on the original invoice if the duplicate is lost in transit. However, the appellate judge noted that Rule 57G(2)(a) allows credit on the original invoice if the duplicate is lost, without mandating prior permission. The judge found the party's claim of lost duplicate copies consistent from the beginning, and since no specific procedure was set by the Department for proving loss in transit, the denial of Modvat credit by the Revenue was unfounded.

4. The judge concluded that the party's claim of lost duplicate copies, along with the statutory provision allowing credit on the original invoice in such cases, should have been accepted by the Asstt. Commissioner. As the party consistently maintained the loss of duplicate copies and the rule permitted credit under such circumstances, the judge rejected the Revenue's appeal, finding no valid ground to deny the Modvat credit to the party.