2000 (10) TMI 767 - AT - Central Excise

Summary

Issues:
Violation of Rule 57H - Permission for Modvat credit not obtained
Adjudication by Asstt. Commr. - Denial of Modvat credit
Alleged delay in availing Modvat credit
Validity of documents for Modvat credit

Violation of Rule 57H - Permission for Modvat credit not obtained:
The appellants filed a declaration under Rule 57G along with a declaration under Rule 57H seeking permission for Modvat credit in respect of 9 consignments. The Asstt. Commr. granted permission for 5 invoices but remained silent on the remaining 4 consignments. Despite repeated requests, no response was received. The appellants took credit on their own after intimating the Asstt. Commr., citing an amendment allowing credit after obtaining a dated acknowledgement. The show cause notice alleged a violation of Rule 57H, without referencing the amendment. The Asstt. Commr. denied credit, stating that the documents were improper and taken after a significant delay.

Adjudication by Asstt. Commr. - Denial of Modvat credit:
The Asstt. Commr. adjudicated the show cause notice, denying the Modvat credit due to improper documents and a delay of over 2 years in availing the credit. The Commissioner (Appeals) upheld this decision, leading to the present appeal. The appellants argued that the Asstt. Commr. did not decide on their application under Rule 57H for the remaining consignments despite repeated reminders. They contended that the credit was taken in accordance with the law after becoming aware of the amendment. The rejection based on a delay was deemed unjustified, and the issue of duplicate invoices was clarified.

Alleged delay in availing Modvat credit:
The appellants argued that the rejection of Modvat credit due to a delay of over 2 years was unwarranted as they were awaiting the Asstt. Commr.'s decision despite reminders. They maintained that the Revenue could not fault them for delayed availing of credit when the delay was due to the Asstt. Commr.'s inaction. The Revenue contended that the delay was unreasonable and a violation of Rule 57H.

Validity of documents for Modvat credit:
The rejection of Modvat credit based on the documents being duplicate invoices was challenged by the appellants. They explained that the invoices were corrected as originals by SAIL, as clarified in a letter. The Asstt. Commr. did not consider this clarification, leading to a dispute over the validity of the documents. The Revenue reiterated the grounds of the authorities below, emphasizing the alleged violations by the appellants.

In the final judgment, the Tribunal noted the peculiar circumstances where the Asstt. Commr. did not act on the appellants' declaration under Rule 57H for over 2 years, allowing the appellants to take credit based on the amended provisions. The Tribunal found fault with the Asstt. Commr.'s adjudication, stating that it went beyond the scope of the show cause notice by introducing new grounds for rejecting the Modvat credit. Consequently, the Tribunal set aside the impugned orders, allowing the appeal and providing consequential relief to the appellants. The stay petition was also disposed of in favor of the appellants.