2015 (10) TMI 725 - HC - Central Excise

Denial of CENVAT Credit - Whether the appellant company can avail the Modvat credit on the basis of original invoice - Held that - Modvat credit cannot be taken on the original invoice. It is not the case of the appellant company that it lost duplicate copy of the invoice in transit - Modvat credit can only be availed on duplicate invoices and the Department is bound to follow the circular instructions in view of the judgment reported in Union of India v. Arviva Industries (I) Ltd. - 2007 (1) TMI 6 - SUPREME COURT OF INDIA - It is clear that the circular instructions are binding on the department and in pursuance of circular instructions only, the order impugned before appellate authority was passed and that order needs no interference by this Court - Decided against Assessee.

Summary

Issues:
- Modvat credit on the basis of original invoice

Analysis:
The main issue in this case before the Andhra Pradesh High Court was whether the appellant company could avail Modvat credit based on the original invoice. The appellant relied on a decision where it was held that if there was a loss of the duplicate copy of the invoice in transit, the appellant was entitled to the credit. However, the respondent cited a different judgment stating that the credit could only be taken if the loss of the duplicate copy of the invoice occurred in transit to the premises of the manufacturer and not just in general transit. The court noted the circular instructions issued by the Government of India, which emphasized that credit should be availed on duplicate invoices, except in exceptional cases where the duplicate is lost in transit. The court held that the circular instructions were binding on the department and upheld the order dismissing the Central Excise Appeal, stating that there was no interference required.

In the first judgment cited by the appellant, it was established that if the duplicate copy of the invoice was lost in transit, the appellant was entitled to the Modvat credit. This decision emphasized that the loss in transit needed to be demonstrated, and if there was no such loss, the appellant could take the credit. However, the judgment cited by the respondent clarified that the loss of the duplicate copy of the invoice should occur in transit specifically to the manufacturer's premises, and the manufacturer must establish this loss to the satisfaction of the Assistant Collector to take credit based on the original invoice. The court noted the difference in interpretation between the two judgments and the requirement for loss in transit to the manufacturer's premises for credit on the original invoice.

The circular instructions issued by the Government of India were crucial in this case, as they specified that Modvat credit should generally be availed on duplicate invoices, with exceptions made only when the duplicate was lost in transit after proper scrutiny and satisfaction of the Assistant Collector. The court highlighted the binding nature of these circular instructions on the department and referenced a previous judgment to support this position. Based on the circular instructions and the legal principles established in previous cases, the court upheld the order dismissing the Central Excise Appeal, emphasizing the importance of following the circular instructions in such matters.