2017 (1) TMI 1174 - AT - Central Excise

MODVAT Credit - endorsed duty paying documents - whether the procedure of endorsement can be the basis for denial of credit and whether credit is admissible to the Appellant after 01.09.1996 on the basis of endorsed invoices? - It is the case of the Revenue that endorsed invoices are not a valid document for taking credit as per the documents prescribed under Rule 57G(3) of the Central Excise Rules, 1944. Held that - the issue is no more res integra in view of the decision of the larger Bench of the Tribunal in Balmer Lawrie v. CCE 2000 (1) TMI 74 - CEGAT, NEW DELHI where it was held that after 01.04.1994, endorsed invoices were not valid documents for the purpose of MODVAT Credit - denial of CENVAT Credit upheld - penalty set aside - appeal disposed off - decided partly in favor of assessee.

Summary

Issues:
Admissibility of CENVAT Credit based on endorsed invoices post-01.09.1996.

Analysis:
The case involved a dispute regarding the denial of CENVAT Credit to an appellant engaged in manufacturing iron and steel products. The dispute arose from the disallowance of credit amounting to ?8,03,632 along with interest and a penalty of ?50,000 for the period between April 2000 to July 2000. The Commissioner(Appeals) upheld the Adjudication order, leading to an appeal. The primary issue revolved around the availing of MODVAT Credit based on endorsed duty paying documents. The appellant argued that procedural endorsements should not impede their right to credit if duty paid inputs were received and used in manufacturing finished goods cleared on payment of duty. Reference was made to CBEC Circulars to support their stance. The Revenue, represented by Ld.Supdt.(AR), supported the findings of the lower authorities.

The Tribunal delved into the core issue of whether credit post-01.09.1996 could be claimed based on endorsed invoices. Citing the decision of a larger Bench in Balmer Lawrie v. CCE, it was established that endorsed invoices were not valid documents for MODVAT Credit purposes post-01.04.1994. This precedent was reinforced by the High Court of Gujarat in a related case. The Tribunal emphasized the mandatory nature of the requirements under Rule 57G of the Central Excise Rules, particularly after amendments in 1994, which eliminated the need for endorsements on duty paying documents. The Tribunal's decision was further supported by a reference to a previous case involving Indian Oil Corpn. Ltd./Bharat Petroleum Corpn. Ltd. The Tribunal concluded that the denial of CENVAT Credit was justified based on existing legal interpretations. However, the penalty imposed was set aside, considering the conflicting views and precedents on the issue.

In conclusion, the Tribunal modified the impugned order to uphold the denial of CENVAT Credit while setting aside the penalty. The appeal was disposed of accordingly, emphasizing the legal precedence and statutory requirements regarding the admissibility of credit based on endorsed invoices post-01.09.1996.