2001 (1) TMI 619 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit by Deputy Commissioner.
2. Interpretation of Rule 57R(3) regarding Modvat credit on capital goods acquired through a loan agreement with banks.
3. Validity of invoices for claiming Modvat credit.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) setting aside the denial of Modvat credit of Rs. 68,27,831 by the Deputy Commissioner. The Tribunal held that filing a declaration with proper receipt in the office of the Assistant Commissioner amounts to obtaining dated acknowledgment, and no separate acknowledgment is required. Therefore, the Tribunal found no infirmity in the Commissioner's order in this regard.

2. The Deputy Commissioner denied a portion of Modvat credit to the appellants due to a loan agreement with banks for establishing a plant. The Deputy Commissioner applied Rule 57R(3) based on the loan agreement terms, concluding that the appellants did not follow the required procedure and thus were not entitled to the Modvat credit. The Commissioner (Appeals) disagreed, stating that the term "financial company" in the rule does not cover banks. However, the Tribunal disagreed with this interpretation, emphasizing that the term "financing company" should not be narrowly construed to only include companies registered under the Companies Act. The Tribunal held that the provisions of Rule 57R(3) must be followed even when capital goods are acquired through a loan agreement with banks.

3. The Commissioner (Appeals) allowed the Modvat credit despite procedural lapses in the invoices. While the Tribunal agreed that certain procedural issues like rubber stamping should not prevent claiming Modvat credit, it noted that invoices without identity of consignor or consignee require further scrutiny. The Tribunal emphasized the need to establish the payment of duty on capital goods covered by such incomplete invoices.

In conclusion, the Tribunal set aside the impugned order and remanded the matter to the Assistant Commissioner for fresh adjudication based on the findings provided in the detailed analysis above.