2009 (1) TMI 176 - HC - Central Excise

Cenvat Credit (MODVAT) on Carbon copy of Challan / Invoice - There is no provision for granting Modvat credit on the basis of a carbon copy - The contention of the counsel for the assessee that carbon copy has been properly verified and defaced does not impress the court as in the present case adjudication has to be only on the question of law - Moreover, laying down a blanket principle permitting Modvat credit on carbon copy may result into setting up of false claims - On such a principle the possibility of availing Modvat credit by many persons against one transaction would not be ruled out which will be highly damaging to the revenue Modvat Credit is not allowed on carbon copy

Summary

Issues:
1. Disallowance of Modvat credit for the carbon copy of challans.
2. Interpretation of rule 57G of the Central Excise Rules, 1944 regarding Modvat credit eligibility based on original duty payment documents.

Issue 1: Disallowance of Modvat credit for the carbon copy of challans
The case involved the disallowance of Modvat credit claimed by the assessee based on carbon copies of challans issued by Tata Iron and Steel Co. Ltd. The revenue authorities contended that Modvat credit was only permissible when accompanied by original duty payment documents. The Tribunal upheld the disallowance, leading to an appeal. The Tribunal found that while TISCO issued a certificate stating they only provide carbon copies, evidence showed other manufacturers received original challans. The Tribunal concluded that the carbon copy cannot be considered as the original document for Modvat credit. The High Court agreed with the Tribunal's findings, emphasizing the need for original documents for claiming Modvat credit to prevent false claims and protect revenue.

Issue 2: Interpretation of rule 57G of the Central Excise Rules, 1944
Rule 57G outlines the procedure for manufacturers to claim credit of duty paid on inputs. It mandates the submission of original duty paying documents to claim Modvat credit. The High Court highlighted that there is no provision in the rule for granting Modvat credit based on a carbon copy of the invoice. The Court emphasized the importance of original documents to verify genuineness and prevent false claims. The Court rejected the contention that carbon copies could be treated as original, as the findings of fact indicated that TISCO issued original challans to other parties. The Court affirmed the Tribunal's decision to disallow Modvat credit based on carbon copies, stating that allowing such claims could lead to revenue loss and false claims. The High Court affirmed the Tribunal's decision, emphasizing the need for adherence to the rule's requirements for claiming Modvat credit.

In conclusion, the High Court affirmed the Tribunal's decision to disallow Modvat credit based on carbon copies of challans, emphasizing the importance of original duty payment documents as required by rule 57G to prevent false claims and protect revenue.