2001 (7) TMI 642 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit by the Asstt. Commissioner and penalty imposition.
2. Validity of Modvat credit claimed by the appellants based on invoices.
3. Compliance with Board Circular No. 49/49/94-CX regarding invoices.
4. Prima facie case for the appellants in claiming Modvat credit.

Analysis:
The Stay Application in question pertains to an Appeal against an order disallowing Modvat credit and imposing a penalty on the appellants. The Asstt. Commissioner disallowed Modvat credit amounting to Rs. 47,65,679.00 to the appellants and imposed a penalty of Rs. 5 lakhs on them. The Commissioner (Appeals) confirmed this decision, leading to the current appeal (E/1266/2001/NB/DB).

The appellants, engaged in manufacturing Tubes and Pipes, had claimed Modvat credit based on invoices from wholesale traders and manufacturers. However, discrepancies were found in the invoices related to the time of removal and mode of transport of the goods. The Commissioner (Appeals) highlighted that the invoices did not comply with the Board Circular requiring specific details like motor vehicle registration number and time of despatch. Consequently, the Modvat credit was denied to the appellants.

The appellants argued that any lapses in the invoices should not result in disallowance of Modvat credit since they had utilized the inputs in manufacturing final products on which duty was paid. They contended that the fault lay with the dealers for not preparing invoices as per the Circular, and they should not be penalized for the dealers' errors. However, the Tribunal found that the appellants failed to rectify the invoice defects before claiming Modvat credit, indicating negligence on their part.

Considering the financial hardship and circumstances, the Tribunal directed the appellants to make a pre-deposit of Rs. 8 lakhs towards the duty amount within eight weeks. Upon compliance, the pre-deposit of the remaining Modvat credit amount and the penalty would be waived, and recovery stayed until the appeal's disposal. Failure to adhere to this order would result in the appeal being liable for dismissal under Section 35F of the Act, without further notice.

In conclusion, the Tribunal upheld the decision to disallow Modvat credit due to non-compliant invoices but provided a conditional relief to the appellants by allowing a partial waiver upon pre-deposit of a specified amount within the stipulated timeframe.